Large food companies are categorized as defensive stocks. They tend to have very stable but slow growth rates and pay a decent dividend. The demand for core food products tends to be recession-resistant and isn’t impacted by unique or rare events like a pandemic or a major financial crisis. Hormel Foods is an American food company that is more than 100 years old. It focuses on protein-rich foods like spam, ham, meat, and poultry. Hormel Foods owns the number one and number two market positions in multiple product categories in which it has a presence. Its strong brand, large scale, and vast experience are key strengths that an investor will want to consider when searching for food company stocks to buy.
How Hormel Foods Evolved Into A Food Industry Giant
Hormel Foods began operations in 1887 when its founder George Hormel borrowed $500 to set up a meat retail and pork packaging business. Within a few years, Hormel turned an abandoned creamery in Austin, Minnesota, into a packaging plant with a smokehouse and slaughterhouse. As business picked up, the company acquired more land and expanded its facilities. The company began exporting its meat products in 1905. Hormel benefited significantly during World War 2 as spam became a staple for US forces. The company evolved its business over the next few decades, innovating and coming out with new products, expanding internationally, and acquiring smaller companies. Today, it does business in 80 countries and is a candidate for the top food company stock.
Hormel Foods closed at $48.08 on 6th April 2021. The stock hasn’t given much of a return over the preceding month. The company’s peer is Tyson Foods, another meat processor business. Tyson Foods’ stock closed at $75.89 on 6th April 2021. Its stock was up almost 3% on a one-month basis. Tyson Foods was trading at a 2.35% dividend yield, while Hormel Foods was trading at a 2.04% dividend yield at the close of trading on 6th April 2021.