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Put Pilgrim's Pride on the Menu

This chicken processor looks attractive today due to its significant opportunity in Mexico and as consumers continue to focus on healthier eating.

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Zain Akbari: We believe media and regulatory scrutiny of industry pricing has created an opportunity to take a position in Pilgrim's Pride, which is poised to benefit from increased protein consumption and healthier eating, despite the sector's lack of economic moats.

While meat processors are sensitive to grain market dynamics, demand tailwinds should prove durable, and we expect chicken to outperform other proteins long term due to its health profile and lower cost. This is despite recent scrutiny of industry pricing practices focused on the construction of indices that are often used to value chicken destined for grocery stores. We see these concerns as overblown, and expect Pilgrim's Pride, Tyson, and Sanderson Farms have limited exposure. 

Zain Akbari does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.