Shares of meat processor
Tyson Foods Inc
) reached a new 52-week high of $26.74 on Jul 8, following its
acquisition of California-based Circle Foods LLC last month. The
share price of the stock has been on the rise and gained 7.0%
since the acquisition on Jun 3. In fact, this is the third time
Tyson has attained a new 52-week high post-acquisition, with
previous highs of $26.05 on Jul 1 and $25.92 on Jun 18.
Shares of this Zacks Rank #2 (Buy) stock closed at $26.57 on
Jul 8, recording a healthy return of 33.5% on a year-to-date
basis. The company's long-term estimated earnings growth rate is
8.5%. Average volume of shares traded over the last three months
came in at approximately 3,180K.
Acquisition of Circle Foods
Tyson acquired Circle Foods from Montreal-based private equity
firm Claridge Inc. to strengthen its presence in the Mexican food
category. 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.
Mexican food is becoming increasingly popular in the U.S.
processed food industry. The acquisition will expand Tyson's food
offerings with popular brands of Circle Foods.
The acquisition also includes Circle Foods' state-of-the-art
facility in San Diego, which is known for its food safety
management system. The plant produces burritos, enchiladas,
chimichangas, tacos, quesadillas and tamales, as well as
tortillas and Indian flat breads. Prior to Circle Foods, Tyson
acquired the Mexican snacks and tortilla producer, Don Julio
Foods of Clearfield, Utah in Apr 2013 to add Mexican cuisine to
Further, Tyson has bright prospects for 2013 with its constant
focus on innovation. New product launches in 2013 are expected to
drive Tyson's profitability. In addition, the expectation of
reduced corn prices in 2013 will prove to be a boon for this meat
producer as corn serves as the main feed for chicken.
Tyson thus expects to achieve top-line sales growth of 3% to
4% every year. Value added sales are expected to grow within 6%
to 8%, while international sales are expected to increase 12% to
16% during fiscal 2013. The company also aims to maintain
bottom-line growth rate of 10% in the long term.
Other Stocks to Consider
Other meat producers in the industry that are worth
Sanderson Farms, Inc.
Pilgrim's Pride Corp.
). Both the companies hold a Zacks Rank #1 (Strong Buy). Another
company in the consumer staples sector that holds a Zacks Rank #1
Flower Foods Inc.
FLOWERS FOODS (FLO): Free Stock Analysis
PILGRIMS PRIDE (PPC): Free Stock Analysis
SANDERSON FARMS (SAFM): Free Stock Analysis
TYSON FOODS A (TSN): Free Stock Analysis
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