Ahead of Easter weekend celebrations, a Christian holiday that commemorates the resurrection of Jesus Christ, investors may be interested in companies that benefit from egg hunts and other festivities.
According to the National Retail Federation, American consumers will spend an average of $151 per person this year on everything from new church attire, a special meal and candy to cards and flowers. As a result, the GuruFocus All-in-One Screener found some companies that benefit from Easter celebrations with at least one-star business predictability ratings as of April 19 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
The Jackson, Mississippi-based company, which produces and sells the eggs necessary for children to dye and the Easter Bunny to hide, has a $2 billion market cap; its shares closed at $41.09 on Thursday with a price-earnings ratio of 18.85, a price-book ratio of 1.96 and a price-sales ratio of 1.30.
The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is slightly overpriced.
Cal-Maine’s financial strength and profitability and growth were both rated 7 out of 10 by GuruFocus. In addition to comfortable interest coverage, the egg producer’s robust Altman Z-Score of 9.99 indicates it is great fiscal standing despite recording a decline in revenue per share over the last three years.
The company’s performance is also driven by margins and returns that outperform competitors and a high Piotroski F-Score of 8 that suggests operating conditions are healthy. Cal-Maine also has a business 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 as of fourth-quarter 2018, Diamond Hill Capital (Trades, Portfolio) has the largest stake with 2.18% of outstanding shares. Chuck Royce (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies and Paul Tudor Jones (Trades, Portfolio) are also shareholders.
Hershey
The Pennsylvania-based confectioner, 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 $24.39 billion; its shares closed at $116.96 on Thursday with a price-earnings ratio of 20.96, a price-book ratio of 17.54 and a price-sales ratio of 3.17.
According to the Peter Lynch chart, the stock is overvalued.
GuruFocus rated Hershey’s financial strength 6 out of 10. Although the company has issued approximately $1.4 billion in new long-term debt over the last three years, it is at a manageable level due to adequate interest coverage. In addition, the high Altman Z-Score of 5.25 suggests it is in good fiscal health.
The confectioner’s profitability and growth scored a 7 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 moderate Piotroski F-Score of 6, which suggests business conditions are stable. Hershey also has a three-star business predictability rank. GuruFocus says companies with this rank typically see their stocks gain an average of 8.2% per year.
With 1.13% of outstanding shares, Simons’ firm is the company’s largest guru shareholder as of the fourth quarter. Other guru investors are Pioneer Investments (Trades, Portfolio), George Soros (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Mairs and Power (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Lee Ainslie (Trades, Portfolio), Yacktman Asset Management (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio).
1-800-Flowers
Selling everything from traditional Easter lilies, which symbolize purity, and bright floral arrangements to gourmet foods, the New York-based florist and specialty gifts retailer is another company that benefits from the spring holiday. Yielding a $1.21 billion market cap, shares of 1-800-Flowers closed at $18.82 on Thursday with a price-earnings ratio of 36.92, a price-book ratio of 3.41 and a price-sales ratio of 1.02.
Based on the Peter Lynch chart below, the stock appears to be overvalued.
Boosted by sufficient interest coverage and a high Altman Z-Score of 4.76, 1-800-Flowers’ financial strength was rated 7 out of 10 by GuruFocus.
The florist’s profitability and growth scored a 6 out of 10 rating. In addition to operating margin expansion, the company is strengthened by robust returns that outperform competitors, a moderate Piotroski F-Score of 5 and a one-star business predictability rank.
Gabelli is the only guru invested in 1-800-Flowers as of the fourth quarter, holding 0.99% of its outstanding shares.
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 stands to benefit from these celebratory feasts. Yielding a market cap of $26.84 billion, shares of the Springdale, Arkansas-based company closed at $73.49 on Thursday with a price-earnings ratio of 15.03, a price-book ratio of 2.04 and a price-sales ratio of 0.68.
The Peter Lynch chart suggests the stock is trading close to its fair value.
GuruFocus rated Tyson’s financial strength 5 out of 10. Although the company has issued approximately $4 billion in new long-term debt over the last three years, it is at a manageable level as a result of adequate interest coverage. The Altman Z-Score of 2.89, however, indicates it is under some minor fiscal pressure.
The company’s profitability and growth fared a bit better, scoring a 7 out of 10 rating. In addition to operating margin expansion, Tyson is supported by returns that outperform industry peers, consistent earnings and revenue growth, a moderate Piotroski F-Score of 5 and a three-star business predictability rank.
Of the gurus invested in Tyson as of the fourth quarter, the T Rowe Price Equity Income Fund (Trades, Portfolio) had the largest stake with 1.20% of outstanding shares. Other top guru shareholders include Simons’ firm, Cohen, Barrow, Hanley, Mewhinney & Strauss, Richard Snow (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), Greenblatt, Ray Dalio (Trades, Portfolio), Pioneer, Tom Gayner (Trades, Portfolio), Bernard Horn (Trades, Portfolio), John Buckingham (Trades, Portfolio), Jones, Scott Black (Trades, Portfolio), Caxton Associates (Trades, Portfolio) and John Hussman (Trades, Portfolio).
Disclosure: No positions.
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