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Why Tyson Foods Stock Popped 51.2% in the First Half of 2019

By Steve Symington - Jul 9, 2019 at 5:08PM

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Despite a world filled with potential disruptions, the protein-based food leader is exactly where it wants to be.

What happened

Shares of Tyson Foods (TSN 1.61%) have steadily climbed 51.2% through the first six months of 2019, according to data from S&P Global Market Intelligence, as investors not only weigh its enviable position following a harrowing African Swine Fever Outbreak overseas, but also the company's recent entry into the budding plant-based protein market.

It certainly helps that the broader markets provided a tide that lifted many boats, including a 17% gain from the S&P 500 in the first half. But Tyson's relative outperformance is indicative of the much stronger tailwinds enjoyed by the protein-centric food company.

Tyson foods semi tractor with prepared beef and vegetable meal on the trailer.


So what

In particular, Tyson Foods should be a surprising beneficiary of an African Swine Fever outbreak that recently wiped out more than a third of China's entire pig herd -- a devastating total that was greater than the United States' entire pig population and represented over 5% of the world's total protein production.

In a company blog post in May, Tyson Foods CEO Noel White called it an "unprecedented event" that should "underscore the power of Tyson Foods' diverse business model. White elaborated that while lower pork supplies should "offer significant upside" to Tyson's pork segment, its chicken and beef businesses should also thrive as consumers turn to substitute proteins.

Speaking of which, Tyson Foods also climbed in June after the company announced its first plant-based and blended protein products, to be included under its new "Raised & Rooted" brand. The move undeniably stemmed from the overwhelmingly positive traction other plant-based protein companies like Beyond Meat (NASDAQ: BYND) have achieved in recent months, but also made Tyson Foods the single largest U.S. meat producer to enter the segment.

Now what

Finally, Tyson Foods further spurred its momentum with its acquisition of the Thai and European businesses of BRF S.A. in early June. The purchase positions the company to capitalize on substantial international growth opportunities, especially as industry experts believe roughly 90% of global protein consumption growth will occur outside the U.S. over the next five years.

As it stands, Tyson Foods' next quarterly report should be set to arrive in early August. But given its global tailwinds stemming from African Swine Flu, prospects for incremental growth through plant-based proteins, and astute acquisitions positioning for future international growth, it's hardly surprising to see the stock so handily beating the markets so far in 2019.

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