Tyson Foods

The recent drought has not been kind to leading poultry producer Tyson Foods ( TSN). Corn is a major source of chicken feed, and rising corn prices are leading to fast-shrinking profit margins on every bird sold. (Tyson is also a major producer of beef and pork as well, which are also affected by corn feed prices.)

Just a month ago, analysts though Tyson would earn nearly $2.30 a share by 2013. Now they think the company will be lucky to earn $1.50 next year. Yet paradoxically, this is precisely the backdrop in place to find this stock appealing.

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Shares have been steadily falling in recent weeks due to the falling profit forecasts, but the near-term gyrations in the farm belt only last for a year or two. Assuming a return to more-normal weather patterns in 2013, Tyson's profits should rebound nicely -- at least by 2014 -- perhaps back to that $2.30 level that analysts had only recently been anticipating.

In that context, the forward P/E multiple is even more appealing -- around 7. And the fact that shares are already just below book value likely provides support at current levels.

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