BUSINESSWEEK ONLINE : NOVEMBER 13, 2000 ISSUE
BUSINESSWEEK INVESTOR -- INSIDE WALL STREET Smithfield: Fat City A good defense seems the best offense in the current market turbulence. So investors are on the prowl for ''defensive'' plays--companies with earnings that aren't subject to the economy's cyclical swings. One Big Board company that has attracted such players is Smithfield Foods ( SFD), the world's largest hog producer and pork processor. Smithfield is one of the few stocks that have bucked the market's downswing--rising from 20 in early May to 29 9/16 on Nov. 1. Even so, Smithfield ''still has a lot of upside potential based on its industry leadership and solid earnings growth,'' argues money manager Dennison Veru of Palisades Capital. He notes that the stock trades at a low price-earnings ratio of 9.6. And for a company with estimated sales next year of $5.8 billion, Smithfield has a market cap of only $1.5 billion. Veru says the stock will be a big mover as it reaps a windfall from a recent contract from Wal-Mart Stores to supply pre-packaged meats. ''Wal-Mart will be a huge customer as the giant retailer starts selling case-ready meats in all its stores,'' says Veru. Smithfield CEO Joseph Luter figures that Wal-Mart will help triple Smithfield's sales of fresh-wrapped pork, to 75 million lb., in the year ending Apr. 30, 2001, up from 23 million lb. in 2000. Smithfield sells 2.8 billion lb. of fresh pork a year, mostly in bulk to grocers who do their own cutting and packaging. Veru, who sees Smithfield's stock hitting 40 in 12 months, expects the company to earn $3 a share in fiscal 2001 and $3.80 in fiscal 2002, up from $1.52 in 2000. By GENE G. MARCIAL _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Smithfield: Fat City CHART: Bringing Home the Bacon INTERACT E-Mail to Business Week Online

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