A ‘Big and Strong’ Stock Play

Let’s talk about Sanderson Farms (NASDAQ:SAFM).

It’s the number three player in the chicken space after Tyson (NYSE:TSN) and Pilgrim's Pride (NASDAQ:PPC).

It looks well positioned for huge growth and stronger margins, as corn prices decline and new opportunities including boneless improve. Overall chicken should be a huge winner in the health-conscious, protein-driven society. Everybody wants to be big and strong these days.

Its retail partners are the biggest names including Kroger (NYSE:KR), Safeway (NYSE:SWY), Publix and Wal-Mart (NYSE:WMT). Earlier this year, the Russian sanctions began to hurt them a little, but not nearly as much as it would have in the past. For the entire industry, exports to Russia have fallen to 7% of total, from 40% two decades ago. That had a big impact.

Last time I featured the stock it gaped open at 5 points lower. So hopefully you got filled a little cheaper than where it is now around. Bottom line, I think it’s an inexpensive stock. And I think Wall Street is probably catching up to this. Recently, fiscal year 15 earnings went up to $10.83, on consensus from $8.64 a couple months ago.

The chart is not that great, but there shouldn't be much resistance to $93, then from there $108. It’s not a short term play, although it’s been great the past couple sessions, but I do love it long term. I’d say slightly greater than average volatility, maybe greater than average risk, although long term I don’t see how they can miss.DISCLOSURES