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Meat Industry Produces Some Juicy Offerings To Growth Investors

The meat products industry is one place where investors can find not only plenty of protein but some capital gains, too. IBD ranks it No. 5 out of 197 industry groups, based on past six-month performance. It might be easy to dismiss the group’s recent strength as a defensive play in a choppy market, but some of the stocks in the group hitting new highs are demonstrating sharp increases in earnings based on fundamental factors in the industry. Hormel Foods ( HRL ) is one such stock. It has been moving in a tight range since reporting earnings Feb. 16 that were 23% above a year earlier. That report represented a second straight quarter of earnings acceleration. The stock is in its fourth week of building a flat base, although it’s made a big move over the last several years. The company is benefiting from margin expansion driven by low prices of pork, which is its core business and its biggest business segment. It sells bacon, pepperoni and fresh pork into retail and food-service channels. Hormel also owns Skippy peanut butter, Spam lunch meats and Jennie-O turkey. The company broadened its offerings with the 2015 acquisition of Applegate Farms, the No. 1 brand in the natural foods organic space. It has a Composite Rating of 98, making it the No. 2 company in the nine-member industry group. The No. 1 company, with a 99 Composite Rating, is Cal-Maine Foods ( CALM ), the nation’s largest egg producer, which focuses on the southeastern part of the U.S. The Jackson, Miss.-based company sold more than 1 million dozen shell eggs last year, representing about a quarter of total domestic egg consumption. It has 33.7 million layers and 8.4 million pullets (young females) and breeders (males and females used to produce fertile eggs). Last fall, McDonald’s ( MCD ) announced that it was moving toward using more eggs from cage-free chickens. Then it began selling breakfast sandwiches all day. Cal-Maine doesn’t list McDonald’s among its top 10 customers. Walmart ( WMT ) is the biggest customer, representing 26% of sales. However, Cal-Maine is a major seller of eggs produced from cage-free chickens, and McDonald’s is likely to help egg prices stay buoyant. Cal-Maine’s stock appears to be starting on the right side of a late-stage base, although the stock still trades below its 50-day moving average. Tyson Foods ( TSN ) is another strong player in the group, with a 97 Composite Rating. Every week, it produces 35 million chickens, 128,000 head of beef and 401,000 head of pork for a total of 68 million pounds of meat. The company works with more than 11,000 family farms. Tyson has worked hard to separate itself from peers by adding value to its products through strong brands such as Jimmy Dean sausage and Hillshire Farm lunch meat. It’s working on other products, such as marinated and breaded poultry. Tyson gapped out of a flat base with a 54.52 buy point and has advanced more than 20%, giving investors a good spot to take profits. The catalyst for the breakout was an earnings report that beat estimates easily and was 49% above the year-earlier number.

Comcast, Charter, Altice Cable Swaps Eyed After Deal Approvals

Charter Communications ( CHTR ) is moving closer to gaining federal regulators’ approval for acquiring Time Warner Cable ( TWC ) — a deal that could set the stage for assets swaps among cable TV firms, including Comcast ( CMCSA ), analysts say. The Federal Communications Commission reportedly is set to greenlight the Charter-TWC merger, with conditions, though the deal is still being studied by California’s state regulators. Charter stock rose to just shy of a record high on the report. Regulators thwarted Comcast’s proposed purchase of TWC in early 2015. Europe-based Altice Group , however, expects to gain approval for its purchase of Cablevision Systems ( CVC ) in May, the company said. Altice earlier acquired Suddenlink Communications. If both the Charter-TWC and Altice-Cablevision deals sail through, cable TV firms are likely to explore asset swaps of cable systems in different markets, says a Barclays research report. “Post the completion of pending cable deals, there is some likelihood of potential asset swaps between the remaining distributors to align footprints more closely and extract more in synergies,” said Barclays. “While the regulatory push-back is fair to consider in this instance, we note that the FCC has concluded in the past that pro-competitive effects of clustering of cable systems tend to outweigh the negatives.” Even if the FCC approves the Charter-TWC merger, California’s OK might not come until late May, analysts say. Charter also plans to buy privately held Bright House Networks. Netflix ‘s ( NFLX ) support has smoothed the path for Charter’s deals, analysts say. Both TWC and Cablevision offer services in the New York City area, a big market. RBC Capital says the FCC might still be opposed to any sizable acquisitions by Comcast, the nation’s No. 1 cable TV firm. Comcast also owns NBCUniversal. “Comcast would be unlikely to be allowed to acquire a major cable firm or programmer, but could acquire long-distance assets, a wireless operator, or could engage in clustering and swaps with other cable operators,” RBC analyst Jonathan Atkin wrote in a recent research report. Charter stock rose 6% in the stock market today , to 198.16. Charter peaked at 199 last March. Time Warner Cable stock rose 3.3% Wednesday.

Apple’s Rumored iPhone SE Is Subject Of ‘Modest’ Expectations

Apple ( AAPL ) is expected to unveil a new 4-inch iPhone on Monday, but analysts have only “modest” expectations for the handset. In a research report Wednesday, RBC Capital Markets analyst Amit Daryanani said the new iPhone SE will be “an incremental positive” for Apple. He reiterated his outperform rating on Apple stock with a price target of 130. Apple stock was up 1.4%, above 106, in late-afternoon trading on the stock market today . The new small-screen phone will provide an upgrade opportunity for iPhone users who prefer a 4-inch display over the 4.7- and 5.5-inch displays on Apple’s flagship phones, Daryanani said. It will also give Apple a refreshed product at the low-end of the premium smartphone segment, he said. “The numbers (for iPhone SE unit sales) will be modest at about 10 million to 15 million annually, but importantly this should provide a buffer in the June and September quarters — the quieter period ahead of the iPhone 7 refresh,” Daryanani said. The iPhone SE will replace the iPhone 5S, which was released in September 2013. The new model is expected to sport an A9 chip, NFC technology to enable Apple Pay and a 12-megapixel, rear-facing camera. But it will not have a press-sensitive touchscreen like the flagship models, according to media reports. In a report Tuesday , S&P Capital IQ analyst Angelo Zino likewise estimated that Apple could sell an additional 10 million to 15 million iPhones, or around 5% of total unit volume, thanks to the new handset. In a research report Monday, Nomura analyst Jeffrey Kvaal said he too had “modest” expectations for the iPhone SE. “We do not expect huge unit volumes from iPhone SE — only in the range of 10 million to 20 million over the first year,” Kvaal said. “We believe this smaller and more affordable iPhone is designed to target emerging markets, as Apple looks to ensure a quality experience among the fast-growing emerging market users.” RELATED: Better Times For Apple Could Start With Spring Product Launch .