Hormel Foods (NYSE:HRL) Should Benefit from Pork Packaging Margins

Hormel Foods (NYSE:HRL) appears positioned to take advantage of the high pork packaging margins now part of the industry narrative.

For the overall sector, Jefferies (NYSE:JEF) noted three main drivers:

"1) low cold storage levels, 2) a favorable supply/demand balance, and 3) favorable production lead indicators – including continued reductions in both the size of the breeding herd and number of sows farrowed."

Jefferies EPS/revenue estimates for full year 2011 and full year 2012 are $3.22/$7.5 billion and $3.44/$7.7 billion.

Jefferies initiated coverage today on Hormel Foods with a "Hold" rating. Hormel was trading at $51.17, down $0.44, or 0.86 percent, as of 2:04 PM EST. They have a price target on them of $56.