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Tickers in this Article: ANN, SJM, HRL, SFD
New releases on Friday August 20, 2010 include several companies that could give some insight into the shape of the economy. Food companies, such as J.M. Smucker Company or Hormel Foods Corporation (NYSE:HRL), might not see the impact of a turn around in the same way a technology company would. A high-end retailer might, on the other hand, feel the grip of a recession.

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Ann Taylor Stores (NYSE:ANN) is a clothing retailer tailoring primarily to women - through both Ann Taylor stores and its higher-priced chain, LOFT. In its most recent quarter ending July 31, 2010, net income was $19.1 million, equating to 32 cents per diluted share. In the second quarter of 2009, net income compared with $3.6 million, or six cents per diluted share. A restructuring charge was left out, which was 1 cent per share. Leaving these charges out, operating income was $30 million, compared to an operating loss of $18 million in the comparable time frame last year. The luxury market feeding LOFT seems to be less than stellar, as customers look for less expensive alternatives.

The J. M. Smucker Company (NYSE:SJM) is a provider of a variety of food products in North America. When looking for less volatility, grocery companies - and any producer of staples, for that matter - is an option. J. M. Smucker is much more recession proof, up approximately 10% over the last two years compared to the S&P500's 17% drop. In the last year, this 0.6 beta stock is up 11%.

In it's most recent quarter ending July 31, 2010, J. M. Smucker had $1.04 earnings per share on $1.047 billion in revenue. In the comparable period one year earlier, EPS was 92 cents on $1.052 in revenues. In the quarter, the earnings per diluted share were 86 cents in 2010 and 83 cents for 2009. No surprises here, and that's what investors like. These are the types of companies you forget about until you see your high risk stocks take a tumble.

Hormel Foods Corporation
Also in the food area is Hormel Foods Corporation (NYSE:HRL), with offerings such as Spam and Stagg Chili. Earnings were $85.4 million, up 11% in the third quarter of fiscal 2010, compared to the same period one year ago, which was $77.2 million. Diluted earnings per share moved from 57 cents to this quarter's 63 cents.

Furthermore, in early trading on Monday, August 23, Smithfield Foods (NYSE:SFD) saw a 2% bounce on decent volume. (Learn economics principles, such as the relationship of supply and demand, elasticity, utility and more. check out Economics Basics.)

The Bottom Line
Companies that provide necessities, like food, are always good choices to pad your portfolio when the market hits bottoms. However, it may take a little more time before luxury items are back in the budget.

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