Hormel Foods (NYSE:HRL)

The company Hormel Foods Corporation is an American food company based in southeastern Minnesota in the United States. It is known for its mass-produced products, especially the brand of pre-cooked meat marketed since 1926. The company was founded by George A. Hormel in 1891 under the name George A. Hormel & Company in Minnesota. It was not until 1993 that it changed its name to Hormel Foods Corporation. It markets products under various brand names including Chi-Chi's, Dinty Moore, Farmer John, Jennie-O, Lloyd's, Spam, Stagg and Hormel.

The company's financial results and margins are closely tied to the cost of pork, poultry and animal feed, such as grains. The company hedges by locking in long-term prices with its suppliers. Consumption in emerging countries such as China may be particularly attractive to Hormel. While the company's domestic market is quite mature, other markets indeed represent attractive prospects for organic growth. The company notes in particular that its Chinese operations are experiencing fundamental growth. 

The price/earnings ratio is quite high, at 16.30, but lower than that of its industry. The current yield, with 2.10% also demonstrates this slightly too high valuation of the stock. However, this price is counteracted by a average annual growth of the significant dividend of 14,48%. It is also worth noting that the company has managed to increase the pocket money it pays to its shareholders for 44 consecutive years. distribution ratio is very conservative, with only 29.40%, which leaves plenty of room for Hormel to continue increasing its dividend in the future, even if things go rough.

Volatility is in the upper average of our portfolio, with 13.56%, but lower than that of the market. The beta, with 0.48, indicates that HRL is not very sensitive to changes in the S&P 500. We can also see in the graph below that the title has little or no interest in the market's ups and downs, which it has been beating happily since 1990.

HRL displays an inverse sensitivity to dollar variations, with $risk of -0.53, a decrease in the USD/CHF generally being accompanied by an increase in the value of the security in CHF.

With its impressive track record of increasing distributions, its sustained dividend growth, the good protection the stock offers against dollar fluctuations and its distribution ratio particularly cautious, we consider Hormel to be an excellent buying opportunity. We will monitor the stock in the coming days in order to benefit from a good entry point.