With the world population growing by 75 million each year, the United Nations projects the world population will reach 9 billion by 2050. As a result, it’s estimated that in 40 years the world will need double the food production of today with global protein consumption projected to grow more than 500% from 1960 to 2022. As people enter the middle class globally, they add protein to their diets. To feed the global demand, the US is exporting more of its domestic protein production.
Tyson Foods (TSN) is one of the largest meat protein companies in the US and is the world’s largest fully-integrated producer, processor and marketer of chicken and poultry-based food products. Tyson is a comprehensive supplier of value-added chicken products through food service, retail grocery stores, club stores and international distribution channels. Although its core business is chicken, in the US Tyson is also the second largest maker of corn and flour tortillas under the Mexican Original brand and through its subsidiary Cobb Vantress, the top chicken breeding stock supplier. The company produces nearly 1 in every 5 pounds of chicken, beef and pork in the US. They have a strong, diversified portfolio of iconic retail foods brands including Hillshire Farm, Jimmy Dean, Sara Lee and Ball Park.
It seems like analysts have taken note of the explosive growth in the meat producer segment as well. The industry ranks number 2 out of the 265 industries in our Zacks Industry Rank. Earnings estimates have shown a bullish trend not just for Tyson but for every company in this competitive space. Two analysts have revised their estimates for Tyson’s earnings next year over the last 30 days. This has pushed consensus up from $3.27 all the way to $3.38 for the company. These recent revisions are a big reason why Tyson comes in at a Zacks Rank #1 (Strong Buy).
Tyson isn’t exactly a high-flying momentum stock. Typically a stock like this would fit more in a value-type wheelhouse. But exciting things have been happening to TSN. The range on the stock has been narrowing over the course of the last year. While earlier in the year the stock consistently made lower highs, the bottom it put in during June of this year seems to have been a turning point. Since then the stock has made two quick pushes towards $42. The last of which happened ahead of the market’s violent downturn at the start of October.
Since the market carved out a bottom on October 15th, price has stabilized and now could be a great time to buy. Stochastics are oversold and the stock is lingering just below the 25 day moving average shifted by 5 days. A break above this level puts the stock back in an uptrend and it could potentially make a run at new 52 week highs.
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