Tyson Foods' Focus On Protein Brands Helps Propel Stock

Shares of meat processor Tyson Foods, Inc. (NYSE:TSN) , which have declined around 2.0% in the past one year, have been rising higher since past one month. During the said time period, Tyson Foods’ shares have jumped 4.8%, outperforming both the Zacks categorized Food-Meat Products industry and the broader Consumer Staples sector.

While the industry grew just 1.1%, the broader sector increased 1.0%. We believe the company’s efforts to expand protein-packed products and offer nutritious products to health-conscious consumers have been driving the stock lately.

Let’s peep into the factors driving the stock?

Focus on Protein-Packed Brands

The acquisition of AdvancePierre (completed on Jun 8), divestment of non-protein businesses (Sara Lee Frozen Bakery, Kettle and Van’s), and focus on growth categories and channels are in-line with the company’s strategy to expand its protein-packed brands. Further, the acquisition will enable Tyson Foods to grow in the fastest growing portfolio of protein-packed brands and expand its fresh prepared foods offering for both out-of-home and in-home eating occasions.

Of late, consumers are shifting away from high-priced beef and processed foods. Meanwhile, chicken nuggets, chicken sandwiches, wings, meatball sandwiches and bone-in chicken have been witnessing higher growth, which shows that consumers are increasingly becoming health conscious and opting for chicken instead of red meat.

Tyson Foods seems to be well equipped with the categories that are currently in high demand at the national foodservice chains. Further, the company is set to make significant investments to improve the supply network within the food-service channel.

Introducing Nutritious Breakfasts

Tyson Foods continuously innovates and adds products to an already rich food line up. As an increasing number of health-conscious U.S. consumers are focusing on nutritious breakfasts, Tyson Foods considers it a high potential category. Recent launches like Jimmy Dean Frittatas and Stuffed Hash Browns, Tyson FoodService Fully Cooked Drumsticks, and Buffalo Chicken Crispitos are getting good response from consumers.

In addition, the company remains on schedule to transition all of Tyson Foods retail branded chicken production to No Antibiotics Ever by June-end. The company will also be launching organic chicken under its 100% antibiotic-free NatureRaised Farms brand in July. Moreover, the company is striving to eliminate the use of human antibiotics from its U.S. broiler chicken flocks by the end of Sep 2017.

Focusing on Meat Substitutes

Tyson Foods is foraying into meat substitutes as per the growing demand of the category. The company set up a venture capital fund worth $150 million to invest in companies that develop meat substitutes. The company also bought a 5% stake in a plant-based protein producer, Beyond Meat.

Tyson Foods, Inc. Price, Consensus and EPS Surprise

Tyson Foods, Inc. Price, Consensus and EPS Surprise | Tyson Foods, Inc. Quote

Bottom-Line

Though we note that sluggishness in beef segment and increasing costs of prepared foods business have been denting the company’s profits since past many quarters, we remain optimistic about Tyson Foods’ efforts to aid boost profits, going ahead.

Tyson Foods currently holds Zacks Rank #3 (Hold).

Stocks to Consider

Investors interested in food stocks in the industry can consider SunOpta, Inc. (NASDAQ:STKL) , Aramark (NYSE:ARMK) and B&G Foods, Inc. (NYSE:BGS) as valuable picks.

SunOpta has long-term earnings growth rate of 15.00% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aramark and B&G, both carrying a Zacks Rank #2 (Buy), have growth rates of 12.00% and 10.0%, respectively.

Zacks' Hidden Trades

While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?

Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.

Click here for Zacks' secret trade>>