Shares of Tyson Foods Inc (TSN) reached a new 52-week high of $25.92 on Jun 18 following its acquisition of Circle Foods. Shares of this meat processor closed at $25.88 on Jun 18, recording a healthy return of 30% on a year-to-date basis. The company’s long-term estimated EPS growth rate is 8.50%. Average volume of shares traded over the last three months came in at approximately 3,734K.
Acquisition of Circle Foods
On Jun 3, Tyson agreed to buy the assets of California-based Circle Foods LLC to strengthen its presence in Mexican cuisine. Mexican food is becoming increasingly popular in the U.S. processed food industry. Tyson acquired Circle Foods from a Montreal-based private equity firm Claridge Inc.
The acquisition will not only expand Tyson’s Mexican food offerings but will also add the popular Circle Foods brands to its portfolio. Circle Foods owns popular brands like Nuevo Grille and Tortillaland handheld Mexican products, Tortillaland uncooked tortillas and ROTILAND Indian flat breads. It also produces private brands for several customers.
The deal will also include Circle Foods’ state-of-the-art facility plant in San Diego, which is known for its strong food safety management system. The plant produces burritos, enchiladas, chimichangas, tacos, quesadillas and tamales, as well as tortillas and Indian flat breads.
Tyson’s focus on Mexican food is also evident from its strategic acquisition of the Mexican snacks and tortilla producer, Don Julio Foods of Clearfield, Utah in Apr 2013. We believe that Tyson’s international growth, mainly in China, Mexico and India is also encouraging.
Other Stocks to Consider
Tyson holds a Zacks Rank #3 (Hold). Other meat producers in the industry that are worth considering are Sanderson Farms, Inc (SAFM) and Pilgrim’s Pride Corp (PPC), both of which hold a Zacks Rank #1 (Strong Buy). Another company in the consumer staples sector that also holds a Zacks Rank #1 is Flower Foods Inc (FLO).
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