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The Finger Licking Allure of Sanderson Farms Inc. (SAFM)

You cannot separate chicken from American comfort cuisine. It is a tasty, low-cholesterol and versatile ingredient of classic snacks and regular meals. It is also part of top processed meat and fast-food brands. The product category need not be an undistinguished generic. Professional food processors can add proprietary values through farming and downstream processes.

These are hard times for the Consumer/Non-Cyclical Industry. Combined market capitalization has not only depreciated during the 12 months ended May 2008, but the decline has become steeper during the first half of June 2008. However, business prospects for the food processing industry remain strong. Customer engagement is a key success driver in this kind of business. Homemakers may hover between chicken brands, but industrial clients need relative price stability. Gross Margin considerations may have to give way to market share protection at times, even in a supposedly Non-Cyclical Sector.

This small-capital stock from Laurel, MS has a dynamic management with long-term vision. It has moved swiftly to end litigation by employees, and is focused on capacity expansion for a better future. The Price to Earnings Ratio on a Trailing Twelve Months basis is less than 12. Sales and dividends have grown by more than 13% over five years. Interest Coverage is more than 12 times. This is an interesting stock for investors. The stock price hid a 52-week low of $27.00 towards the end of 2007, but the general trend in the first half of 2008 appears to be positive.

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