Pigs infected! Get ready for a slaughter
Today's Financial News - Posted October 19, 2009
Investors in pork producers like Smithfield Foods (NYSE:SFD), Tyson Foods (NYSE:TSN) and Hormel Foods (NYSE:HRL) are watching their shares closely now that H1N1 has been confirmed in American pigs.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): Here we go again. Now that we are at the cusp of another wintertime flu season, the swine-flu fears are growing by the day.
As if we need anything more than sick babies and immunization shortages to create a media frenzy, the Agriculture Department just announced a few show pigs in Minnesota tested positive for H1N1.
Get ready for a slaughter!
We know the sick pigs are likely headed to the “Big Farm” real soon, but what about the company’s that got slaughtered when H1N1 fears were first making their rounds.
Smithfield Foods (NYSE:SFD), Tyson Foods (NYSE:TSN) and Hormel Foods (NYSE:HRL) saw strong price declines earlier this year as the flu strain erupted from Mexico. Now that the first true “swine” case is reported within American borders, how will shareholders be treated?
Feast or famine
The early indications are good. Of the three companies, Smithfield is the only one trading in the red at the moment and the $14 stock is off by less than a dime. That is a good sign that the market is not ready to overreact, at least on the initial news.
It may mean right now is a good time to get out of these plays. It is well know the H1N1 virus will not jump from pigs to humans. But that is not the worry.
Instead, investors need to worry about what the virus will do to pig herds if an outbreak becomes widespread. For a company like Smithfield, with its Murphy-Brown and Premium Standard Farm subsidiaries here in the states, it could spell trouble.
Together, just these two farm units are responsible for bringing nearly 20 million pigs to the market each year. With prices already depressed by as much as $30 per hog, any further decline could have a seriously negative impact on future earnings.
What’s more, infected pigs are not going to be good for business, even if they are no threat to humans.
There is no doubt, the winter months are going to be a public relations and possibly an operational nightmare for the nation’s pig farmers. For the three big pork producers listed above, it is going to be a rough ride.
All of these stocks have done well over the past seven months, with Smithfield doubling in value and Tyson more than tripling. Unfortunately, the hot streak may be coming to an end.
Get ready for a slaughter.
Next Article: Peabody Energy: Playing China’s red-hot coal Industry
Be the first to leave a reply.
Your comments are welcome
Follow TFN via RSS or Twitter |
 |
 |
 |
Advertisement
Latest Headlines
- The Big Picture for Sinobiopharma, Inc. (SNBP)
- Beazer Homes USA, Inc. (BZH) and Hovnanian Enterprises, Inc. (HOV) up despite horrid housing news
- The FDA catalyst: 2010 moves in MannKind (MNKD), Roche Holding (RHHBY), Acorda Therapeutics (ACOR) show it still works!
- Steepest drop since Feb. 2009: Here we go again!
- Is the silver run over? Coeur d’Alene Mines (CDE), Silver Wheaton (SLW), Alto Group (ALTO), Hecla Mining (HL), Endeavour Silver (EXK) close down