Do You Have Enough Protein in Your Portfolio?

Rudy Martin

If you’ve been investing for long enough, at some point you probably stopped being surprised that some of the top-performing stocks are actually unexciting companies from just-as-mundane industries.

Yet many investors expect they need the super-glamorous stars from tech and other hot sectors in their portfolios.

Many portfolio managers subscribe to this theory, so they can show their clients that they own all the popular names. But oftentimes, those stocks hold more mystery than they do opportunity.

But that doesn’t mean you have to go searching high and low for stocks you’ve never heard of in industries you don’t know much about to have a shot at meaningful returns.

In fact, some of the best investments are hiding right in plain sight. They can be as close as what you’ll find in your own home … even right in front of you on your dinner plate!


These Bargain-Priced Gold

Miners are Set to Skyrocket!

We’re coming upon what could be one of the most-memorable buying opportunities in the last 30 years in gold … and some bargain-priced junior miners could hand you 5x, 10x, even 40x the returns when gold makes a move!

Right at this very moment, Sean Brodrick is using his M.M.T. Method to analyze the top values in the junior resource space. He’s gearing up to issue his top new mining investments for 2013 this Tuesday, April 16.

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Internal Sponsorship


Under-Recognized Stocks Can Often

Provide The Most-Memorable Gains

I do a lot of work with stock-picking models. If there’s one truism when it comes to generating a consistent stream of returns, it’s to honor your chosen model time and again.

Of course, you can always take a chance on a stock or a sector that your system isn’t showing you. But remember, the only person your portfolio has to impress is you. The added dollars in your brokerage account don’t really care how they were generated.  

In other words, does it really matter whether your own top-performing stocks come from a currently fashionable sector or instead from a basic industry recovering from an acute bout of under-recognition?

If you don’t mind owning the latter, my model is showing me one such industry right now … plus a handful of stocks within it that can provide some meaty returns!

A Sector You Can Sink Your Teeth Into

Special circumstances are converging to bring some added profits to one of humanity’s oldest — and most-basic — forms of commerce: the raising and/or purveyance of meat.

Three major economic trends are converging to make this industry a profit machine in the not-too-distant future, including:

  • A huge increase in its customer base.
  • Higher prices for its products.
  • Lower costs for its raw materials.

Add in the fact that this industry’s product is, for most of its customers, a staple rather than a discretionary purchase, and (forgive the pun), now you’re cooking!

Despite repetitive euro-zone crises, uneven growth prospects in China and the recent wave of competitive currency devaluations driving the broader markets (and many investors) to distraction, there’s a growing industry that’s offering portfolio stability plus significant potential price appreciation.

Plus, this industry is just emerging from a depressing profit squeeze, and we could see a situation that results in major advances in the business results and stock prices of its member companies.

Speaking of which, here are …


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8 Ways You Can Bring Home the Bacon

Today we’re looking closely at eight protein providers that capitalize on several of the global “mega-trends” I’m helping my subscribers to follow to investment success in 2013 and beyond.

  • Developing markets where the biggest wealth is being created. Three of the firms listed in the adjoining table are headquartered in large and dynamic — and populous — emerging markets like Asia, Latin America and elsewhere.
  • The growing global consumer class.  As their incomes expand, so do their appetites, which increasingly include steady helpings of poultry, pork and beef in their diets.
  • The commodity super-cycle. As we’ve discussed here before, it is a safe bet that billions of people will continue to gobble up oil, iron ore, copper, soybeans, sugar and meat as they get richer.

The eight worldwide meat companies in the accompanying table represent diversity in product offerings as well as geography.

Protein Suppliers to Benefit From

the Commodity Super-Cycle Megatrend

* P/E ratio divided by EPS growth rate

(low values normally considered most favorable)

(Click here to view full-size image)

Possibly the purest play product-wise is Smithfield Foods (SFD), which deals primarily in pork. Geographically it covers Mexico and much of Europe in addition to the United States.

While Pilgrim’s Pride (PPC) is primarily a vendor of chicken products, it serves customers in Puerto Rico and Mexico as well as the United States, its home country.

Although Hormel Foods (HRL) deals primarily in pork, its offerings include other meats and food-related products, with broad geographic distribution across the globe.

Similarly, Tyson Foods (TSN) is best-known as a purveyor of chicken, but it also sells significant quantities of beef and pork products.

In many ways, Seaboard Corp. (SEB) is the most-diversified company on the list. Although a major factor in pork and turkey in the United States, Japan, Mexico and other countries, the parent firm’s other divisions include commodity trading, marine services and offerings as diverse as biodiesel.

Widely diversified in its food offerings is Brasil Foods (BRFS). In addition to pork, poultry and beef, the company also markets frozen lasagnas, pizzas, cheese breads, pies, vegetables, milk and various other dairy products. Its various food offerings also include desserts, juices, soy milk, soy juices, margarines, sauces, mayonnaise, soy bran and refined soy flour, which is also used in animal feed.

The primary product of Mexico-based Industrias Bachoco SAB (IBA) is poultry, but the firm’s offerings also include pork and other food products.

Similarly, China-domiciled Zhongpin Inc. (HOGS), as its ticker symbol suggests, is primarily a pork seller but also markets other meat and food products.

HOGS is achieving success by providing meat for the rapidly expanding number of foreign and Chinese fast-food outlets in the world’s most-populous nation.

One More Reason Protein Providers

Can Whet Your Appetite for Profits

Plain and simple: price support for the product.

The U.S. meat industry’s 2012 profit squeeze resulted from rocketing feed prices caused by unrelenting droughts in the nation’s grain belt.

Compounding the problem was that producers couldn’t get the prices they needed as meat came onto the market. That’s because herds were previously thinned because of the unavailability of feed.

But the U.S. Agriculture Department recently predicted more typical weather conditions in 2013 would generate a record corn and soybean harvest.

If this forecast comes to fruition, it would push the average crop prices for corn to $4.80 per bushel, down a third from 2012, and to $10.50 per bushel for soybeans, a drop of 27%.

The USDA forecast that U.S. farmers will plant 97.3 million acres of corn — the most acres since 1936. It also anticipates soybean plantings at 77.1 million acres, down slightly from 2012 but the fourth-largest ever.

The abundance of feed should act to remedy the cost side of the meat business while the downsized herd counts that result in tight supplies that should translate into firm meat prices.

Happy Trading!


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