Hormel Foods (HRL) Is Today's Strong On High Volume Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Hormel Foods ( HRL) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Hormel Foods as such a stock due to the following factors:

  • HRL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $43.9 million.
  • HRL has traded 232,239 shares today.
  • HRL is trading at 5.16 times the normal volume for the stock at this time of day.
  • HRL is trading at a new high 4.05% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on HRL:

Hormel Foods Corporation produces and markets various meat and food products worldwide. The company operates in five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, Specialty Foods, and International & Other. The stock currently has a dividend yield of 1.8%. HRL has a PE ratio of 24. Currently there are 3 analysts that rate Hormel Foods a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Hormel Foods has been 795,600 shares per day over the past 30 days. Hormel has a market cap of $14.7 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 1.01 and a short float of 3.2% with 5.87 days to cover. Shares are up 7.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Hormel Foods as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and solid stock price performance. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.8%. Since the same quarter one year prior, revenues slightly increased by 6.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HRL's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.18, which illustrates the ability to avoid short-term cash problems.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Food Products industry and the overall market, HORMEL FOODS CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.

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