Sure, I know what some of you may be thinking, ‘What’s this guy doing foraging in the refrigerator of the Meat Products industry in the Consumer Goods sector when he could be eyeing an exciting digital venture or something similar?”
It’s because people still have to eat, and companies such as Tyson Foods, Inc. (NYSE:TSN) are increasingly finding new ways to keep them fed with products they desire. Therefore, for investors, the following are a few reasons to consider adding Tyson Foods, Inc. (NYSE:TSN) to your investing grocery cart.
Diverse Products and a Global Reach
Tyson produces, distributes, and markets chicken, beef, pork, prepared foods, and associated products. The company provides their products to the U.S. and approximately 130 other countries.
For investors there’s some safety in numbers, such as product category numbers. Tyson offers fully-cooked chicken and beef products, snack products, to-go products, uncooked frozen chicken, fresh chicken, canned/pouched chicken, heat and eat entrees, and more.
Investors should note that a down-dip in one product category isn’t a disaster for Tyson. with so much being offered in other product categories. Likewise, with their extensive market reach worldwide, downturns in one region can be offset by market strength elsewhere…and there’s a lot of “elsewheres” to choose from.
Acquisitions to Feed Consumer Tastes
The company’s on a bit of a feeding frenzy with recent acquisitions. I like their purchase of assets of Circle Foods, LLC. The focus here for Tyson Foods, Inc. (NYSE:TSN) is consumers’ penchants for menus of the Mexican variety. Circle Foods is established in this market with well-known products, including Nuevo Grille and Tortillaland products.
Before this acquisition, Tyson was already on trend with their Tyson Mexican Original subsidiary and their brand Mexican Original. The Tyson Mexican Original subsidiary acquired the assets of Don Julio Foods this year (Don Julio Authentic and Clover Club brands).
Investors should consider that Tyson Mexican Original is the second-largest tortilla manufacturer in America. Don Julio Foods, now in Tyson’s kitchen, produces corn and flour tortillas and salty snacks. It looks like market share will only grow via this combination.
Tyson has their Tyson Fresh Meats division. They offer their “branded,” “beef,” and “pork” programs. They serve the retail and foodservice industries. Again, the company’s diversification is something for investors to consider. Tyson Foods, Inc. (NYSE:TSN) is capturing a share of consumer dollars – whether consumers are perusing the aisles of their local supermarkets or opening the door at their favorite casual restaurant, Quick Service Restaurant (QSR), or some other eating establishment.
Think of the value their programs provide to foodservice. It’s hectic and competitive enough in this industry to have to worry about consistent, quality meat supply. Tyson focuses on this supply chain. For example, Tyson Fresh Meats sends out more than 5 billion pounds of boxed beef annually, worldwide. Branded products they offer include premium Certified Angus Beef.
There’s something to be said for investing in companies that have “been there, done that.” In other words, they’re not typically shaken to the core by economic volatility. They’ve experienced it before, may currently be experiencing it, and more than likely will experience it in the future. They can ride these storms out because of their experience, the historical precedents that they’ve dealt with successfully in the past, and the aforementioned diversification as applies to products, geographic areas, and operating divisions.
Tyson Foods, Inc. (NYSE:TSN) had their problems in the 2013 2Q. For example, total sales volumes for Prepared Foods decreased in the quarter due to reduced demand for specific foodservice products. However, they’re not flinching. Their president & CEO, Mr. Donnie Smith, stated in May, “Our second quarter typically is our most challenging, and this quarter was no exception. However, our business is structured to withstand adverse conditions, and we worked through the issues while positioning ourselves for what we believe will be a strong performance in the second half of the year.”