Hormel Foods Corp (NYSE:HRL) is most well-known for its famous — or some would say infamous — canned ham product first introduced in 1937 — Spam.
Its roots go back to 1891, when George A Hormel opened up shop in Austin, Minnesota. He was born in Buffalo, New York and moved to Chicago where he learned his trade in the meat-packing business in the South Side stockyards. With $500, he opened his operation in Austin.
By the early 1900s, Hormel was shipping product from Texas to Minnesota. But it was during WWII where Hormel made it biggest splash.
Hormel’s Big Break
The army was looking for nutritious rations capable of withstanding the rigors of war, travel and temperature. And meat that didn’t have to be heated to be safe.
Spam was the solution. But its popularity didn’t stop after the war. By 2003, Spam was sold in 41 countries on six continents. By 2007, HRL sold its 7 billionth can of the meat product.
But HRL has never rested on one product for its success. It has a history of growth and expansion, including its dividend. It is one of the top dividend aristocrats, raising its dividend every year for the past 51 years.
And over those years it has expanded its line of iconic products — Skippy, Chi-Chi’s, Dinty Moore, Jennie-O and recently, health-focused brands like Applegate and Wholly Guacamole.
Also, considering its roots, it also provides unbranded meats for house label products, which is becoming a larger market for millennials who are less brand loyal and more price conscious. The point is, HRL continues its tradition of finding opportunity, even when the markets are the most challenging.
Last month, HRL went toe-to-toe with Anglo-Dutch giant Unilever plc (ADR) (NYSE:UL) for British food company Reckitt Benckiser Group plc (ADR) (OTCMKTS:RBGLY). However, McCormick & Co. (NYSE:MKC) ended up buying Reckitt for $4.2 billion.
By market cap, UL is about 10 times the size of HRL, so it will be interesting to see how this deal works out. But regardless, the fact is, consolidation of some of the smaller players in the space is happening and HRL is looking to eat, not be eaten.
Bottom Line on HRL Stock
HRL’s biggest push these days is expanding its health foods line and appealing to the new market demand for better quality products to promote better lifestyles.
For example, its new Muscle Milk division is all about protein delivery for athletes. Applegate is one of the top all-natural deli meat producers in the U.S. And HRL has recently launched a line of protein-focused snacks using its Hormel Natural Choice meats.
The stock has been treading water for the past quarter, off about 3% yet delivering a 2% dividend. But as an iconic U.S. brand for the past 126 years, HRL is one stock you can be sure will be there for the long term.
Richard Band’s Profitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.