Wall St Week Ahead-Food stocks on the menu for Thanksgiving week

Yakult Honsha

20/11/2015 22:58

By Rodrigo Campos 
    NEW YORK, Nov 20 (Reuters) - There are no picky eaters on 
Thanksgiving - as long as the menu is hormone and antibiotic 
free, locally grown and convenient.  
    That is the reality for major food producers, including 
companies reporting earnings next week, as they adapt to a more 
health-conscious consumer. 
    Tyson Foods  TSN.N  and Post Holdings  POST.N  report 
results Monday, followed Tuesday by Campbell Soup  CPB.N  and 
Hormel Foods  HRL.N . They are beating the S&P 500 by different 
margins, but that is not the case for all the industry. 
    Spending on food is shifting due to better-informed and 
increasingly health-conscious consumers. Savvy investors are 
taking note.  
    ""We are looking at changing consumer patterns with regards 
to looking at the label," billionaire value investor Mario 
Gabelli told Reuters reporters during the Reuters Global 
Investment Summit in New York. 
    He mentioned yogurt and probiotics - not exactly 
Thanksgiving staples, but buzz words among health-minded 
consumers. Gabelli's investing ideas include General Mills 
 GIS.N , Paris-based Danone  DANO.PA  and Tokyo-based Yakult 
Honsha  2267.T  for their yogurt products, and probiotics maker 
Chr Hansen  CHRH.CO , from Denmark. 
    Gabelli is not alone in looking for value in the trend. 
Earlier this week, Target  TGT.N  Chief Executive Brian Cornell 
singled out yogurt as a key category "where we added premium and 
better-for-you brands." 
     
     SHIFTING GROUNDS 
     Tyson Foods, likely the provider of many a turkey at the 
table next week, said in April it plans to end the use of human 
antibiotics in its chicken by 2017, while Hormel announced in 
May the acquisition of natural and organic meat processor 
Applegate Farms. 
     Investors will likely sift through their earnings next week 
to see how the process of catering to a new type of customer is 
affecting the business. 
    Hormel's stock, up 31 percent year to date, has gained more 
than 20 percent since the Applegate announcement. It hit an 
intraday record high on Friday before closing the day down 1 
percent. 
    Tyson shares are up almost 9 percent this year, while the 
food producers index  .5SP302020  is up more than 5 percent. The 
S&P 500  .SPX  has gained 1.5 percent in 2015 so far. 
    Not all investors, however, are seeing enough of what they 
are looking for in the food business when it comes to catering 
to millennials and healthy eaters.  
    "I look at food companies hoping to find the buzzwords I 
think the millennials are looking for (but) they're not offering 
fresh, artisanal, that kind of stuff," said Kim Forrest, senior 
equity research analyst at Fort Pitt Capital Group in 
Pittsburgh. 
    She said lack of time is key and convenient foods are a fact 
of life for many people. "I think some company that cracks that, 
the prepared foods for the next generation, that would be a real 
winner." 
     
    NEXT WEEK'S EARNINGS 
    One of the shifts in consumption is gearing more toward 
protein, where Tyson and - on a smaller scale - Hormel, 
dominate. 
    "It is part of the healthier eating, diets are shifting to 
more protein, less carbohydrates," said Timothy Ramey, analyst 
at Pivotal Research Group in New York. 
    Of course it's not all about the food when it comes to 
investor interest. If it announces an increase in its dividend 
for next year, Hormel will join a select club of companies that 
have upped dividends for 50 straight years. 
    U.S. markets will be closed Thursday for the Thanksgiving 
holiday and Friday will be a half-session day.     
 
 (Additional reporting by Ross Kerber and Jonathan Stempel; 
Editing by Dan Grebler) 
 ((rodrigo.campos@reuters.com; @rodrigocampos; +1.646.223.6344; 
Reuters Messaging: 
rodrigo.campos.thomsonreuters.com@reuters.net)) 
  
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Keywords: USA STOCKS/WEEKAHEAD