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Investopedia Advisor submits: People in general are eating healthier these days. Plus, there is real worry that terrorists might try to contaminate the North American beef and poultry supply, or that the bird flu could cause consumers to stop buying meats altogether.

Not surprisingly, this hasn't bode well for Tyson Foods (TSN), which is the world's largest processor of poultry and red meat. Although the stock is trading near its 52-week low (of $12.57), I think the shares are worth a second look.

Here's what I see…

I see a big name company that has fallen on some tough times. But it is a company that has been around for more then 70 years, and has built-out distribution channels that are simply unbelievable. Think about it. You can't go into a supermarket, almost around the world, without seeing the Tyson brand. Its marketing prowess has made this a household name!

In addition, it's a member of the S&P 500, it has a fairly solid balance sheet with about $2 a share in cash and marketable securities, and has a long history of reporting strong cash flows. In other words, it is and is expected to be, financially able to go about its business, and prosper even through these difficult times.

Now I don't have an answer to the terrorist variable, or the bird flu. Nor can I predict if meat-related products will ever regain the popularity they enjoyed twenty years ago. But, I can say without a doubt that the world is becoming ever more populated, and meat continues to be a staple of our diets. This means that the company's products, as opposed to some fad, are needed. Going forward, I suspect that demographic trends will only lead to increased demand.

That's the view from 10,000 feet.

Digging a bit deeper, I am also impressed with its July 13 press release detailing plans to reduce corporate costs during these tough times, plans which will save the company an estimated $200 million. As part of the announcement, management said that it intends to eliminate some 420 management level (higher-paying) positions, and not to fill another 430, which are currently vacant.

To put this into perspective, the company employs about 114,000 people, so on a percentage basis, the number of employees being affected is quite small. But in terms of real dollars, these moves will save the company a bundle.

Further, the company also said it suspended management's merit bonuses and the company-matching for its stock purchase plan. The rest of the savings will come from a reduction in travel-related expenses, supplies, consulting fees and relocation expenses.

Although the cost savings is expected to cost the company about two to three cents per share in the coming quarter, long-term total cost savings should top $200 million and be (positively) felt by 2007.

One worry that goes part and parcel with all of this cost-cutting is that some members of the remaining management team could get fed up with the cutting of their benefits, and ultimately defect. This is indeed a possibility, but I think that two other industry-wide factors should more then offset this risk.

The first being domestic chicken prices, which had dropped precipitously in the wake of the news-stream surrounding the bird flu late last year and early this year, have begun to rebound. In addition, its fiscal third and fourth quarter (ending September), is a time when seasonal demand perks up, and Tyson's products starting flying off the shelf (no pun intended).

Incidentally, the remaining key management employees are tied up with valuable stock options. If they quit, they would lose them, so this also helps to offset some worry.

Wall Street figures the company will lose about one cent per share in fiscal 2006, which is in-line with management's guidance range. And, thanks to the anticipated cost savings, the company is expected to earn 90 cents per share in fiscal 2007.

Because of the expected turn in profits over the coming 12 to 18 months, we are also starting to see Wall Street analysts turn a little more bullish on the shares. In June, Stifel Nicolaus initiated coverage with a "hold", and in early July, JP Morgan upgraded the stock from "Neutral" to "overweight."

But to be clear, Tyson isn't out of the woods yet. It needs to prove to Wall Street that its expected cost savings will be a reality before the stock sees any significant rebound. It also is subject to macroeconomic factors beyond its control. For this reason, the shares may be volatile in the near-term, and it is why I would start buying into the stock now. I would not, however, establish a full position.

In fact, I'd wait until year-end to do the lion's share of my buying, just in case tax loss selling drove the stock down even further. But again, I'd nibble now, because it appears as though the pendulum is starting to swing the other way for Tyson, and I would sincerely hate to miss the upside potential.

Realistically, if the company is able to meet fiscal 2007 earnings projections, and forecast double-digit growth again in 2008, I think this stock could have an upside of as much as 50% from current levels.

By Glenn Curtis, Contributor - Investopedia Advisor

Glenn Curtis started his career in the 1990s as an equity analyst for a regional firm in New Jersey. There, he covered companies in the technology, entertainment, and gaming industries. Curtis has since worked as a financial writer at a series of both web and print publications, including TheStreet.com and Registered Rep Magazine. He has held his series 6,7,24, and 63 securities licenses.

At the time of release Glenn Curtis owned no shares in any of the companies mentioned in this article.

Source: The Bull Case for Tyson Foods