Tyson Foods (TSN) and Sanderson Farms (SAFM) are two of the more intriguing stocks in the Food Makers category. These companies are benefitting from rising food prices. These companies are well-positioned to absorb higher prices relative to their peers and pass them onto their customers.
While both will benefit from this tailwind, one stock stands above the other.
Which of the two stocks is the better play? We answer this question below, making the case for investors to add one of these Food Makers stocks to their portfolio.
TSN distributes prepared foods including a wide variety of meats. In fact, TSN is the country’s largest meat processor. TSN certainly has its merits yet the stock’s overall POWR Rating is disappointing C. TSN has an A grade in the Value component along with Bs in the Sentiment and Stability components. Click here to find out how TSN fares in the remainder of the POWR Ratings components such as Quality, Momentum, and Growth.
Of the 82 publicly traded companies in the Food Makers space, TSN is ranked in the top third, slotting in at 27th. The Food Makers industry as a whole has a B POWR Rating. Investors who would like to learn more about the stocks in this category can do so by clicking here.
TSN has a forward P/E ratio of 13.47, making it quite clear the stock is trading at a fair price. In fact, TSN is trading less than a dollar away from its 52-week high of $79.28. The stock’s 52-week low is $54.28.
The analysts agree that TSN is fairly priced at $78 and change, setting an average target price for TSN is $78.45. The highest target price for TSN is $85 while the lowest target price for the stock is $68. Of the 14 analysts who have issued recommendations about TSN, three consider it a Strong Buy, five consider it a Buy, and six consider it a Sell. No analysts consider TSN a Strong Sell or Sell.
SAFM is a chicken processing business that makes, processes distributes, and markets both fresh and frozen poultry. SAFM is ranked second of the 82 publicly traded companies in the Food Makers category. Investors looking for more information about this sector can find it by clicking here.
With an A POWR Rating grade, SAFM qualifies as the cream of the crop in the context of food stocks. SAFM has A grades in the Sentiment and Growth components along with a B grade in the Value component. Click here to learn how SAFM fares in the remainder of the POWR Ratings components such as Quality, Stability, and Momentum.
The analysts believe SAFM is slightly underpriced. These experts have established an average target price of $164.33 for the stock. In other words, the analysts believe SAFM will climb slightly more than 2%. The analysts’ high target price for the stock is $180 while the lowest target price is $148. Of the 10 analysts who have issued recommendations for SAFM, two consider it a Strong Buy, three consider it a Buy, five consider it a Hold, and zero consider it a Sell or Strong Sell.
SAFM’s forward P/E ratio is a bit higher than that of TSN, coming in at 17.21. However, this slightly elevated forward P/E ratio compared to other stocks in the Food Makers category is understandable considering SAFM is trading merely $5 away from its 52-week high of $167.41.
Which is the Better Buy?
The POWR Ratings make it clear SAFM is the better of these two Food Makers stocks. With stellar POWR Ratings and strong component grades, SAFM appears to be a solid play. This is not to say investors should steer clear of TSN. TSN also has its merits. However, if you have to pick one of these two stocks, SAFM is clearly the better choice.
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SAFM shares were unchanged in premarket trading Thursday. Year-to-date, SAFM has gained 27.21%, versus a 11.64% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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