According to the National Turkey Federation, U.S. turkey consumption has more than doubled since 1970; in 2011, the average American put away 16.1 pounds of the bird a year.
Obviously, holidays are a peak time, accounting for 31% of total consumption. But that’s down from 50% in 1970, which means more Americans are eating turkey outside the typical Christmas and Thanksgiving periods.
In 2009 (the last year for which stats are available), processors churned out $16 billion worth of turkey-related products. Last year, 248.5 million turkeys were produced in the U.S.
Here’s a look at four stocks with connections to the quintessential American Thanksgiving meal. Two control the nation’s leading turkey producers, while the others make stuffing and desserts, including pumpkin pie.
1. Seaboard Corporation (AMEX: SEB) owns 50% of Butterball, which processed 1.30 billion pounds of turkey last year. Butterball’s 675,000-square-foot plant in Mt. Olive, North Carolina, is also the world’s largest turkey processing facility.
Seaboard is actually an agricultural conglomerate whose main divisions focus on pork processing, ocean shipping and grain trading. It also operates a number of smaller businesses, including an alternative energy subsidiary that converts pork fat and vegetable oils into biodiesel fuel.
Seaboard has over 90 years of history and has never split its stock, so it isn’t cheap at $2,162 a share. Still, it is up 5.6% in the last six months. The shares also trade at a reasonable 10.9 times the company’s last 12 months of earnings.
2. In second spot is Hormel Foods (NYSE: HRL) which processed 1.29 billion pounds last year through its Jennie-O Turkey Store division. Its other businesses include Grocery Products (including Stagg chili and the SPAM brand), Refrigerated Foods (such as Hormel party trays and meats) and Specialty Foods (which makes private-label products).
Minnesota-based Hormel reported its latest results on Tuesday. In the quarter ended October 28, the company saw sales gains at three of these divisions, with the exception being Refrigerated Foods, which posted a 2.6% decline from a year ago. Turkey products sales were a highlight, with a 5.0% gain, though Grocery Products was the standout, with a 20.6% gain thanks to strong sales of SPAM products and Hormel chili.
As a result, Hormel’s overall sales rose 3%, to $2.17 billion. Per share earnings rose 14%, to $0.49 from $0.43. That fell just short of the consensus forecast of $0.50.
The company also offers a tasty dividend; it announced that it is raising its quarterly payout for the 47th straight year, from $0.15 to $0.17. The new yearly rate of $0.68 yields 2.27%.
3. What’s turkey without stuffing? Two years ago, Investing Daily’s Jim Fink picked Campbell Soup (NYSE: CPB) as one of his favorite Thanksgiving dinner stocks (Fink also liked Seaboard, above). That’s partly because of his view that the company’s Pepperidge Farm stuffing is tops in the category. Kraft Foods Group’s (NasdaqGS: KRFT) Stove Top stuffing, he wrote, “is second-rate and pales in comparison.”
As well, Campbell makes broths, stocks and gravies, along with its core soup products, for the U.S. market through its U.S. Simple Meals segment (which supplied 38% of its overall sales in the latest quarter).
Like Hormel, Campbell reported its latest results on Tuesday. In the quarter ended October 28, 2012, its sales rose 8% from a year ago, to $2.34 billion. That mostly reflected its recent purchase of California’s Bolthouse Farms, which produces carrots, salad dressings and juices.
The company earned $245 million, or $0.78 a share, down from $265 million, or $0.82. Without restructuring charges and costs related to the Bolthouse purchase, Campbell’s earnings gained 5%, to $279 million. Per-share profits rose 7%, to $0.88, because it had fewer shares outstanding thanks to its recent buybacks. That was ahead of the consensus estimate of $0.85.
The stock fell slightly in the wake of the earnings report, but it’s still up more than 10% in the past six months. Campbell also trades at a 15.3 times its last 12 months of earnings, roughly in line with the competition. As well, it pays a $0.29-a-share quarterly dividend, for an attractive 3.21% yield.
4. Top off your Thanksgiving feast with Sara Lee pumpkin pie. The iconic dessert brand is now controlled by Hillshire Brands Co. (NYSE: HSH) after Sara Lee spun off D.E. Master Blenders 1753 N.V. (Amsterdam: DE), which sells coffee and tea in Europe, Brazil and Thailand, in June. Sara Lee then took the Hillshire name for its North American business.
Hillshire gets 15% of its sales from desserts and frozen bakery products, though the bulk of its business (85%) is packaged meat. It controls some of the best-known banners in the industry, such as Jimmy Dean, Ballpark and Hillshire Farm.
“Hillshire could be an acquisition target,” Alexia Howard, a Bernstein analyst, told Bloomberg last week. “It’s high margin. It’s less volatile in terms of profit. The brands bring you more negotiating leverage with retailers.”
As well, there are few other similar acquisition targets in the space. Hillshire’s main competitor, Oscar Meyer, is already owned by Kraft Foods Group.
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