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Tyson Foods: Almost Fully Priced But Decent Income Potential

May 04, 2021 8:44 PM ETTyson Foods, Inc. (TSN) Stock16 Comments
Geoff Considine profile picture
Geoff Considine


  • Tyson Foods (TSN) has had a great start to 2021, but remains below its 2020 pre-COVID highs.
  • The valuation is reasonable but expected growth is modest.
  • The Wall Street consensus is bullish but the price is close to the 12-month price target.
  • The market-implied outlook (derived from options prices) is neutral.
  • My overall rating is neutral but covered calls look somewhat attractive.

Tyson Foods
Photo by RiverNorthPhotography/iStock Unreleased via Getty Images

Tyson Foods (NYSE:TSN) is expanding into fully non-meat protein sources. Non-meat protein consumption is growing rapidly and TSN knows it cannot afford to get left behind. Aside from the direct

This article was written by

Geoff Considine profile picture
Geoff has worked in quantitative finance for more than twenty years. Before entering finance, Geoff was a research scientist for NASA. Geoff holds a PhD in Atmospheric Science from the University of Colorado - Boulder and a BS in Physics from Georgia Tech. Neither Geoff Considine nor Quantext (Geoff's company) are investment advisors. Nothing in any commentary here on Seeking Alpha or elsewhere shall be regarded as advice.

Analyst’s Disclosure: I am/we are long TSN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I have sold covered calls as described in the post

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (16)

banmate6 profile picture
Here's my TSN investment and it's up to date standing.


date shares total_price $/share
24-Mar-2020 100 $5,976.00 $59.7600 basis
16-Jun-2020 0.6627 $42.00 $63.38 div
15-Sep-2020 0.6387 $42.28 $66.19 div
16-Dec-2020 0.6721 $45.08 $67.08 div
16-Mar-2021 0.5996 $45.38 $75.68 div

A $5,976.00 basis is now worth $8,084.81, a 35.29% gain on 30.87% CAGR. With $174.74 in reinvested dividends. This has beaten the S&P500 even in a strong bull.

I bought at a PE of 9.93, which was relative to a PE = 15 fair value. Right now it is 13.83. The easier money has been made, but it is still a decent buy, having some alpha, unlike a clearly overvalued S&P500.

I will look to add on dips. People must eat. And TSN will innovate ecologically sustainable methods.
@banmate6 Very nice gain. Congrats.
banmate6 profile picture
@Aristocrat & Dividend King Investor

Thank you. Most of my money aims for this kind of value. This one is exceptional. But I've gotten pretty good gains most of the time.

You can see in my blog where I always provide details for corroboration. For example, I've gotten near 30% CAGR on 2 long term AAPL investments and 75% CAGR on 1 shorter term. They're worth some $250k from a $24k basis. Adaptive value investing has rarely let me down.

Deviating from this has however. I lost $26k in my CBI/MDR investments. Also in my blog. I misunderstood CBI was a commodity cyclical. Lesson learned. I basically have these categories of investing.

1) Dollar cost average in an age appropriate mix of low cost bond and stock index funds. My 401k and 529 for kids go here.

2) Adaptive value investing: 90% of my new monies in here.

3) Quality growth investing: high PE but high GAAP growth, reasonable PEG. Like SBUX, V, and NVDA in their ascendancy.

4) Quality non-GAAP no PE. Like CRM, AMZN, and so in their ascendancy.

5) Cyclicals: never again! The pain of CBI/MDR and Uranium One, all belly up, will haunt me always!

The rest is pure speculation. I am currently gambling on XPENG and AQB as pure speculation. Money I can afford to lose.

In contrast, I was confident buying into TSN. Like I was also with relatively recent buys of NOC, LMT, CLX, and HON. Value is value.

Lastly, I know you know all this. But it bears repeating. Especially to myself...because it can be tempting to ride hype and momentum.
@banmate6 Thank you for your comment. I am a small player when compared to many, but being in the game is a must. When taking time to be in the Market I have always made more than 30%+ each year. Super conservative so I will never invest more than 100k in the Market. This time around my gains are 58% in less than 13 months (result of pandemic in 2020). Good luck to us both.
craftbrewinfo profile picture
Tough to add at these levels.. TSN is a hold for me.
I wonder if the author, instead of selling the January 21, 2022 $85 (strike) call options for $3.39, he had considered selling the January 21, 2022 $82.50 (strike) call options for $4.17?
Geoff Considine profile picture
@WoodyWW I did consider selling the $82.50 calls but I chose a strike far enough out that the option is less likely to be exercised. The challenge with a close in strike is that early exercise is more probable and thus you may lose some of the dividend income. In addition, I prefer to keep more of the potential upside to minimize "sellers remorse." Given an overall neutral outlook, though, choosing the closer in strike is something I considered.
Thanks for the article, I appreciate the point of view.

I have no quibble with the notion that TSN is fully valued at today's prices. But I also believe TSN is one of those names that fits the old saw, 'price follows earnings'. The earnings estimates I am familiar with suggest that TSN should earn ~$6.50 or so for FY '23; TSN's historic multiple is around 14.5. I'm sitting on a decent gain in the name, but see no reason to sell.

Best of luck to all.
My gain on TSN was quite high so I took some profit on Monday. I did the same for 5 of my other stocks that were up 25-40%. The nearly $10k will be put back into savings. I prefer to keep the percent gain for my stocks at around 20%, but there are a few exceptions. Wednesday there will be more rebalancing. Unbelievable returns in this volatile Market. Totally enjoyable.
There is talk of chicken shortages due to not enough workers and chicken demand from Chicken wing places and fast food etc.
@R investor Wings at times are not available in the supermarket. Breasts, legs, thighs yes, but wings are sometimes hard to find. When available I buy a few packages, vacuum seal and freeze for use later. TSN's business is amazing. I am Long.
@Aristocrat & Dividend King Investor chicken is nothing. i am a meat manger. we get our meat from tyson, we just got an email saying steak meat is going up. your talking what was ~12 per lb, is now going to ~15 per lb. should be interesting to see their next year earnings. wither it was cost of product, or they just upped the price because they could.
@iway I have about 30 ribeye steaks also sealed in my freezer, also pork chops 18 lbs of bacon, and about 14 slabs of pork ribs. Saved a ton of money buying on sale and sealing.
Alfred L. Angelici profile picture
Great article, and I agree that TSN is a very good company. But I have to ask... what were you researching in 2020 when this company’s common stock was regularly selling at a discount below $60/share (between Mar - Nov) and the dividend was ~3% annually?? (Not all investors want to own rollercoaster / nosebleed stocks; especially retirees and conservative investors looking for a stable growth and income stock.)
I'm Long TSN.
Killaslow2387 profile picture
@Alfred L. Angelici there are thousands of stocks, and during the time you just mentioned there were thousands selling st low prices. You can only research and write articles on so many stocks. There’s always someone like you that makes this comment and every time I am blown away by how stupid it sounds hahaha. Like you could make that comment about endless stocks it’s ridiculous. Like one person can write an article on every undervalued stock right at the moment of undervaluation during a falling market.
In your symmetrical option implied price return are you certain the market is correctly discounting this article CBS news headlined today 2021/05/04 as:


Perhaps only a one time event with no longer term implications but should have implications with a 7 month option.
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