Growing demand offers a longer-term opportunity for Tyson Foods, Inc. (TSN) investors, even as the company is down 22% this year and replaced its chief executive.
Tyson Foods dropped 0.5% to $63.06 per share after market close on Monday.
According to a Statista report, animal protein demand is set to explode over the next 20 years, with egg and poultry demand projected to increase by 50% or more.
This spike in demand will be helped along greatly by rising incomes in emerging markets, which will allow for more consumption of the hearty, protein driven products that Tyson provides.
A Rabobank report from November 2017 points to China, Thailand, Vietnam, Malaysia, the Philippines, Indonesia, and Mexico as key markets of growth in poultry, pork, and beef demand.
As Tyson's largest foreign market is Mexico, the secular consumption trend bodes well for the company.
Spencer Shelman, portfolio manager for Palouse Capital, a Washington-based firm that oversees a total of $295.4 million on behalf of its clients and holds 46,108 shares of Tyson, was confident in these long-term trends meaning for Tyson.
"We like the name in the long term because their strength in proteins is undeniable," Shelman explained. "We're sticking with them based on the long-term secular play in proteins."
Millennial Market
Millennials are also a market that the company can look to target and expand marketing to, which furthers the company's role as a longer-term protein play.
"[Tyson] is obviously a protein play," Jim Cramer, TheStreet founder and portfolio manager for the Action Alerts Plus portfolio said on the floor of the New York Stock Exchange today. "Millennials have an affinity for protein, and now that's obviously a broad generalization, but the numbers have borne it out."
In fact, according to a research paper from the IFIC Foundation, protein is the number one food that millennials are trying to consume.
Further, an Acosta report states that 81% of millennial stated that protein content is "extremely or very influential when making grocery store purchases."
With that in mind, America's soon-to-be largest market could be a major catalyst for Tyson.
To be sure, Shelman and investors are still concerned on trade issues that have clouded the agriculture and food industries in the short term.
Shelman said that for the time being, with the uncertainty surrounding the stock and the macroeconomic factors at play, he is not comfortable adding or subtracting from his position in the near term.
But if investors are looking to take advantage of the longer term demand trends for protein products, Tyson appears to be a viable play.
