Hormel Foods, Inc. (NYSE: HRL) sells a wide variety of convenient, packaged meat foods, including those of the Hormel Chili, SPAM, Oven Ready, Jennie-O, Lloyd’s Barbeque, and Valley Fresh brands in over 40 countries. The company operates in five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, Specialty Food, and Other. Hormel purports that 34 of its brands enjoy the number one or two market share position. In addition, 80% of Hormel's sales come from branded products rather than meat processing, affording it a margin cushion when input prices rise. This helps protect the company from private label brands.

The company's financial results and margins are tied closely to the cost and supply of pork, poultry, and feedstuff commodities prices like grain, which are the principal costs in raising livestock; corn prices in particular have risen since 2007 as ethanol producers have increased demand for the grain. The company generally enters into long-term hedging arrangements with suppliers, but major fluctuations in price or supply disruptions can adversely impact results. In the longer term, consumption in increasingly wealthy countries such as China may be particularly attractive to Hormel given its strong portfolio of branded meat products.

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