Ahead of Easter weekend celebrations, a Christian holiday that commemorates the death and resurrection of Jesus Christ, investors may be interested in companies that benefit from egg hunts and other festivities as new stimulus funds, positive trends in Covid-19 vaccinations and growing consumer confidence boosts spending.
According to the National Retail Federation, American consumers will spend, on average, a record $179.70 each this year on everything from church attire, a special meal and candy to cards and flowers. The collective amount of $21.6 billion is only down slightly from last year's pre-pandemic forecast of $21.7 billion.
Based on these trends, the GuruFocus All-in-One Screener found some companies that benefit from Easter celebrations with strong predictability ratings and GF Values that range from modestly undervalued to modestly overvalued as of April 2 included Cal-Maine Foods Inc. (CALM, Financial), The Hershey Co. (HSY, Financial), 1-800-Flowers.com Inc. (FLWS, Financial) and Tyson Foods Inc. (TSN, Financial).
Cal-Maine Foods
Cal-Maine Foods (CALM, Financial), which produces and sells the eggs necessary for children to dye and the Easter Bunny to hide, has a $1.9 billion market cap; its shares closed at $38.83 on Thursday with a price-earnings ratio of 28.34, a price-book ratio of 1.87 and a price-sales ratio of 1.3.
The GF Value Line suggests the stock is modestly undervalued currently based on its historical ratios, past performance and future earnings projections.
The Jackson, Mississippi-based company's financial strength and profitability were both rated 7 out of 10 by GuruFocus. In addition to comfortable interest coverage, the egg producer's robust Altman Z-Score of 8.16 indicates it is good standing despite recording a decline in revenue per share over the past five years.
Although the operating margin is in decline, the company is driven by returns that outperform over half of its competitors and a high Piotroski F-Score of 8 that suggests operating conditions are healthy. Cal-Maine also has a predictability rank of one out of five stars. According to GuruFocus, companies with this rank typically see their stocks gain an average of 1.1% per year.
Of the gurus invested in Cal-Maine Foods, Diamond Hill Capital (Trades, Portfolio) has the largest stake with 5.53% of outstanding shares. Jim Simons (Trades, Portfolio)' Renaissance Technologies, Third Avenue Management (Trades, Portfolio) and Lee Ainslie (Trades, Portfolio) also own the stock.
Hershey
Hershey (HSY, Financial), which manufactures many popular Easter candy products like Reese's Peanut Butter Eggs, Cadbury Crème Eggs, Whopper's Robin Eggs and Hershey's chocolate bunnies, has a market cap of $32.89 billion; its shares closed at $158.76 on Thursday with a price-earnings ratio of 25.98, a price-book ratio of 14.8 and a price-sales ratio of 4.08.
According to the GF Value Line, the stock is modestly overvalued currently.
The valuation rank of 3 out of 10 supports this assessment since the share price and price ratios are all approaching multiyear highs.
GuruFocus rated the Pennsylvania-based confectioner's financial strength 5 out of 10. Although the company has issued approximately $1.1 billion in new long-term debt over the past three years, it is at a manageable level due to adequate interest coverage. In addition, the high Altman Z-Score of 4.78 suggests it is in good standing even though assets are building up at a faster rate than revenue is growing.
The company's profitability scored a 9 out of 10 rating, driven by operating margin expansion, strong returns that outperform a majority of industry peers, consistent earnings and revenue growth and a high Piotroski F-Score of 7. Hershey also has a 3.5-star predictability rank. GuruFocus says companies with this rank typically see their stocks gain an average of 9.3% per year.
With 1.62% of outstanding shares, Simons' firm is the company's largest guru. Other guru investors include Pioneer Investments (Trades, Portfolio), Ray Dalio (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Mairs and Power (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and Yacktman Asset Management (Trades, Portfolio).
1-800-Flowers
Selling everything from traditional Easter lilies, which symbolize purity, and bright floral arrangements to gourmet foods, 1-800-Flowers (FLWS, Financial) is another company that benefits from the spring holiday. Yielding a $1.8 billion market cap, shares of the company closed at $27.71 on Thursday with a price-earnings ratio of 17.76, a price-book ratio of 3.61 and a price-sales ratio of 0.98.
Based on the GF Value Line, the stock appears to be modestly overvalued currently.
The valuation rank of 5 out of 10 is more indicative of it being fairly valued, however.
Boosted by comfortable interest coverage and a high Altman Z-Score of 3.83, the New York-based florist and specialty gifts retailer's financial strength was rated 6 out of 10 by GuruFocus. The return on invested capital also eclipses the weighted average cost of capital, indicating good value creation.
The company's profitability scored an 8 out of 10 rating. In addition to operating margin expansion, 1-800-Flowers is strengthened by robust returns that outperform competitors, a moderate Piotroski F-Score of 6, which indicates business conditions are stable, and a 3.5-star business predictability rank.
Mario Gabelli (Trades, Portfolio) is the company's largest guru shareholder with 0.87% of outstanding shares. Simons' firm and Greenblatt also have positions in the stock.
Tyson Foods
As with most major holidays, over half of all people surveyed by the NRF said they plan to prepare a special meal to share with friends and family on Easter Sunday. As one of the world's largest processors and marketers of chicken, beef and pork products, Tyson (TSN, Financial) stands to benefit from these celebratory feasts. Yielding a market cap of $27.31 billion, the company's shares closed at $74.87 on Thursday with a price-earnings ratio of 13.32, a price-book ratio of 1.75 and a price-sales ratio of 0.64.
The GF Value Line suggests the stock is currently fairly valued.
The valuation rank of 7 out of 10 leans more toward undervaluation even though the share price and price-sales ratio are both closing in on one-year highs.
GuruFocus rated the Springdale, Arkansas-based company's financial strength 5 out of 10. Although Tyson has issued approximately $1.4 billion in new long-term debt over the past three years, it is at a manageable level as a result of adequate interest coverage. The Altman Z-Score of 3.05 also indicates it is in good standing even though assets are building up at a faster rate than revenue is growing. The ROIC also surpasses the WACC, suggesting good value creation.
Tyson's profitability fared a bit better, scoring an 8 out of 10 rating. In addition to operating margin expansion, the company is supported by returns that outperform industry peers, consistent earnings and revenue growth, a moderate Piotroski F-Score of 6 and a four-star business predictability rank. GuruFocus data shows companies with this rank return, on average, 9.8% annually.
Of the gurus invested in Tyson, the T Rowe Price Equity Income Fund (Trades, Portfolio) had the largest stake with 1.20% of outstanding shares. Other top guru shareholders include Yacktman Asset's funds, Simons' firm, PRIMECAP Management (Trades, Portfolio), Pioneer, Tom Gayner (Trades, Portfolio), Dalio, NWQ Managers (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Greenblatt.
Disclosure: No positions.
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