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Hormel Foods Hits New 52-Week High on Strong Outlook

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Shares of the premium meat products company Hormel Foods CorporationHRL hit a new 52-week high of $65.68 on Oct 9, 2015. However, the stock closed the trading session slightly lower at $65.42. The stock has gained roughly 29% over the past one year. Despite its strong price appreciation, this Zacks Rank #2 (Buy) stock retains adequate fundamental strength to further drive its price. The stock is currently trading at a forward P/E of 25.11x and has long-term earnings growth expectation of 11.13%.

Growth Drivers

Hormel Foods has successfully widened its margins with the help of tactical cost-reduction programs and lower input expense. Backed by an innovation-based growth strategy, the company has also strengthened its product portfolio, over time. For instance, of late, the company has been witnessing increasing demand for its megamex food items, chili and skippy peanut butter, wholly guacamole dips and muscle milk products across all major markets.

Going forward, we expect such strategies to further enhance the company's top-and bottom-line figures. The company has raised its guidance for fiscal 2015 earnings to a range of $2.57-$2.63 per share from the previous projection of $2.50-$2.60.

Hormel Foods is making concerted attempts to improve its business on the back of competent solutions and value-added strategies. This apart, the company is keen on making strategic acquisitions to enhance revenues in the upcoming quarters. For instance, the Applegate acquisition (Jul 2015) will likely help the company tap the growing demand for organic and frozen food products among American consumers, thereby increasing its sales in the U.S.

At the same time, Hormel Foods remains committed to increasing the value of its shareholders through efficient capital-deployment programs. In fiscal third-quarter 2015, the company had paid dividends worth $184.8 million, up 22.9% year over year.

Other Stocks to Consider

Other well-ranked stocks in the industry include JBS S.A. JBSAY , Tyson Foods, Inc. TSN and A-Mark Precious Metals, Inc. AMRK . All three stocks carry a Zacks Rank #2, same as Hormel Foods.

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TYSON FOODS A (TSN): Free Stock Analysis Report

HORMEL FOODS CP (HRL): Free Stock Analysis Report

JBS SA-ADR (JBSAY): Free Stock Analysis Report

A-MARK PRECIOUS (AMRK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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