John Leonard, CFA
Special situations, micro-cap, contrarian, CFA

Sanderson Farms Could Be The Next Smithfield Foods

Investment thesis

Sanderson Farms (NASDAQ:SAFM) is a prime takeover target given the low valuation and attractive company-specific qualities. The combination of rising chicken prices and lower feed costs should provide a strong tailwind that results in significant price appreciation regardless of a takeover.

Company overview

SAFM is the third largest poultry processor in the U.S. with weekly capacity of 9.375 million chickens. SAFM sells fresh and frozen chicken products to retailers, distributors and casual dining operators in the U.S. as well as to customers who resell into export markets.

SAFM has the wind at its back

The recent positive financial results should continue given rising chicken prices, falling feed costs, increased consumption and a near term, industry-wide capacity...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details