Bull’s Eye Report: Sanderson Farms (SAFM)

This chicken producer looks ready to fly!

   

At StateoftheMarkets.com, we strive to “own the best and ignore the rest” in our equity portfolios. Toward this end, each day we search our database for a “top stock” (a top rated company in terms of earnings strength as well as company and industry performance) that presents a strong technical “set up” and a good entry point.

In short, when our equity team is looking to add a stock to one of our portfolios, the “bull’s eye” stock shown below is generally their first choice.

Company Symbol Industry Stock Rating YTD% Gain S.T.
Stop Loss
Sanderson Farms SAFM Packaged Foods & Meats 9.8 +39.88% $67.94


Why We Like The Stock:

Sanderson Farms (SAFM) is our most compelling buy today due to the fact that it is a top rated stock (in terms of earnings strength and company/industry performance) with a positive technical set-up. Packaged Foods & Meats stocks have had a pretty good year thus far, as evidenced in charts like Snyder’s-Lance (LNCE), Dean Foods  (DF), Post Holdings (POST), and SAFM.

SAFM has been straight up since July of 2012, only pausing to pull back just recently in June and again in the second half of this month. Currently, the stock has pulled back from its July 11 highs of $73.67 back towards its 50-day moving average. SAFM appears to be basing after two weeks of modest losses. While we wouldn’t give an extended chart like this too much wiggle room (a tight stop at $67.94 seems appropriate), SAFM could still be good for a run back to recent highs should the stock turn the corner this week. In an extended bull market like this, we’re looking to limit risk on our short-term trades while maintaining realistic price targets. SAFM fits the bill, and we would be buyers at current prices.

We Would Be Buyers:

At the current price (~$68.90).

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Company Profile:

Sanderson Farms, Inc. is a poultry processing company engaged in the production, processing, marketing and distribution of fresh and frozen chicken products. In addition, the Company is engaged in the processing, marketing and distribution of prepared chicken through its wholly owned subsidiary, Sanderson Farms, Inc. (Foods Division). It sells ice pack, chill pack, bulk pack and frozen chicken, in whole, cut-up and boneless form, under the Sanderson Farms brand name to retailers, distributors, and casual dining operators in the south-eastern, south-western, north-eastern and western United States and to customers who resell frozen chicken into export markets. During the fiscal year ended October 31, 2011 (fiscal 2011), it processed 434 million chickens, or over 2.8 billion dressed pounds.

Stock Rating:

The Stock Rating indicates the combined score of our proprietary Earning Strength and Company Performance models. The rating scale is 0 – 10 with 10 being the highest.

Disclosure:

At the time of publication the editor and affiliated companies own the following positions: None

Note: Positions may be bought or sold while this publication is in circulation without notice.

Sanderson Farms – Last 3 Months

 Bulls Eye Report: Sanderson Farms (SAFM)

Sanderson Farms – Last 12 Months

 Bulls Eye Report: Sanderson Farms (SAFM)

Sanderson Farms – Last 5 Years

 Bulls Eye Report: Sanderson Farms (SAFM)


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