redbaron

Tyson Foods Starts to Look Appetizing

Tyson got killed because of high corn costs, and that was because, at least in part, ethanol. Their earnings were down 90% in yesterdays announcement. Ethanol has a gov't mandate to increase usage for the next several years, here in the US. Further, corn ethanol is the only technology we have to make ethanol, currently, and we have a import tax blocking imports of ethanol from other sources. We are going to use corn to make ethanol for the forseeable future (the promise of other technologies is yet to be developed), and that is likely going to keep corn prices high. Tyson will turn to a negative profit picture in the forseeable future, if this high corn price continues. In addition, their huge network of trucks is costing big bucks to fuel. I suggest checking on how many trucks TSN operates to move their frozen and refrigerated products around the country quickly. The high cost of diesel cannot be positive for them. IMHO, buy it under 10-11, and only then if the corn prices moderate.

And it might be wise to check and see how other TSN recommendations worked in the recent past.