Food can be fun but is definitely essential, and food stocks can be a shelter during a market storm like the current pullback. Smithfield Foods is feeling effects of the correction, but it's among a handful of stocks that are weathering it and thriving.
One important metric to look for in a stock is an 80 or higher Relative Strength Rating. On Monday, Smithfield Foods, the largest pork products producer in the U.S., hit that mark, with a jump from 78 the prior trading day to 81. The upgraded 81 rating means Smithfield Foods stock tops 81% of all other stocks for price performance this past year.
Smithfield Boasts Strong Ratings Overall
History shows that the market's biggest winners tend to have an 80 or higher RS Rating as they launch their biggest price moves.
Food giant Smithfield, which primarily sells meat products including bacon, sausages and hot dogs, has 14 major brands including its namesake Smithfield, as well as Farmer John breakfast foods and Carando Italian foods.
Among its other ratings, Smithfield, Va.-based Smithfield carries a decent 81 EPS Rating and a strong 88 Composite Rating. Additionally, it boasts a B+ Accumulation/Distribution Rating, showing that ETFs, mutual funds and the like have been fairly heavy buyers of its stock the last 13 weeks.
Smithfield is owned by Chinese conglomerate WH Group. Smithfield just went public in the U.S. in January, trading on the Nasdaq under the ticker SFD. It has an annual run rate topping $14 billion.
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Smithfield Foods is working on a flat base with a 34.74 buy point. See if it can clear the breakout price in heavy trading.
Relative Strength Line In New High Territory
The stock's relative strength line is near record high territory, a promising indicator ahead of a potential breakout.
Earnings growth rate declined in the company's most recently reported quarter from 4,200% the prior quarter to still-strong 63% growth on a year-over-year basis, to 49 cents. Revenue dipped 1% in its most recent quarter to $3.95 billion, improved from a 4% drop in the previous report.
Smithfield says on its website that it will announce first quarter results on April 29. Analyst consensus is for 48 cents EPS, up from 43 cents a year ago. Revenue is projected at $3.63 billion, vs. $3.4 billion a year ago, according to FactSet.
The company earns the No. 3 rank among its peers in the 14-stock Food-Meat Products industry group. Cal-Maine Foods is the No. 1-ranked stock in the group.
This article was created automatically with Stats Perform's Wordsmith software using data and article templates supplied by Investor's Business Daily. An IBD journalist may have edited the article.
Please follow James DeTar on Twitter @JimDeTar
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