Zacks Industry Rank Analysis Highlights: Agrium, Hormel, Kellogg, Monsanto and Sanderson...

Zacks Industry Rank Analysis Highlights: Agrium, Hormel, Kellogg, Monsanto and Sanderson Farms

CHICAGO--(Business Wire)--
Zacks.com releases the latest Zacks Industry Rank. Stocks featured
in this week's analysis includes as Agrium (NYSE: AGU), Hormel (NYSE:
HRL), Kellogg (NYSE: K), Monsanto (NYSE: MON) and Sanderson Farms
(Nasdaq: SAFM). To see the Zacks Industry Rank and the trend in
earnings estimates revisions for more than 200 industry groups, visit
http://at.zacks.com/?id=3154.

Zacks Industry Rank Analysis is written by Charles Rotblut, CFA,
Senior Market Analyst for Zacks.com.

Flooding caused by last week's storms will force many farmers to
choose between replanting new corn crops, planting soybeans or opting
for insurance. Due to seasonal factors, the decision will have to be
made quickly, particularly for those who want to replant corn.

The USDA had cut its corn harvest forecast as recently as a week
ago, before the rains soaked Iowa. On Monday afternoon, the agency
estimated that 57% of the corn crop was in good or excellent
condition.

Not surprisingly, corn futures continue to hit new records. For
investors, the higher corn prices bring both opportunities and risks.

Opportunities in Agriculture

Farmers will replant some crops; this is a certainty. The
replanting process will likely further increase demand for fertilizer.
This may partially explain why the second-quarter earnings estimate
for Agrium (NYSE: AGU) has jumped 56 cents within the past seven days
to $3.06 per share. AGU is Zacks #1 Rank ("strong buy") stock and is
classified in Fertilizers (http://at.zacks.com/?id=4675).

Seeds and other agricultural products will also be needed. This
should bode well for Monsanto (NYSE: MON). One analyst just raised his
second-quarter forecast to $1.37 per share from $1.29 per share. The
consensus estimate calls for this Zacks #1 Rank company to earn $1.35
this year. MON is classified in Agricultural Operations
(http://at.zacks.com/?id=4676).

Higher Food Prices Ahead

The biggest fallout from the flood will be food prices. Higher
corn and grain costs will make livestock more expensive to raise.
There is some scuttlebutt that livestock population will be
intentionally brought down as farmers will be forced to determine
whether or not they can afford to maintain the size of their current
herds. Sanderson Farms' (Nasdaq: SAFM) CEO, Joe Sanderson, Jr.,
observed in his company's recent earnings release that egg sets are
down from year ago.

The question facing investors is whether meat and dairy companies
will be able to offset the higher feed costs through price increases
and cost-cutting. Revisions made during the past 30 days are mixed.
The full-year consensus earnings estimate for poultry producer SAFM
has been revised upwards, while the consensus earnings estimate for
SPAM maker Hormel (NYSE: HRL) has been cut. (Both companies reported
earnings in late May.)

Processed food companies should also be affected, though analysts
have not made many adjustments to their forecasts recently. For
example, full-year forecasts for Kellogg (NYSE: K) are unchanged.

SAFM is a Zacks #1 Rank stock. HRL and K are Zacks #3 Rank
("hold") stocks.

K is classified in Food-Miscellaneous/Diversified
(http://at.zacks.com/?id=4677). HRL and SAFM are classified in
Food-Meat Products (http://at.zacks.com/?id=4678).

It may take several weeks or months for the recent flooding to
influence food and beverage company profit margins. Investors should
monitor both trends in earnings estimate revisions and profit margins
to determine whether or not companies are able to offset the higher
costs.

The interactive Zacks Industry Rank List allows you to see all of
the companies, and their Zacks Rank, within more than 200 industries.
See the list at http://at.zacks.com/?id=3208.

About Zacks Industry Rank and the Zacks Rank

Zacks Industry Rank is calculated by averaging the Zacks Rank for
all covered companies within a given industry. The Zacks Rank is
assigned to approximately 4400 stocks and ranges from #1 ("Strong
Buy") to #5 ("Strong Sell"). Both the Zacks Industry Rank and the
Zacks Rank are quantitative indicators designed to cover periods of
1-3 months.

Since 1988, the Zacks Rank has proven that "Earnings estimate
revisions are the most powerful force impacting stock prices." Since
inception in 1988, #1 Rank stocks have generated an average annual
return of +30%. During the 2000-2002 bear market, Zacks #1 Rank stocks
gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the
Zacks Rank system has just as many Strong Sell recommendations (Rank
#5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5
stocks have underperformed the S&P 500 by 270% annually (+3% versus
+11%). Thus, the Zacks Rank system allows investors to truly manage
portfolio trading effectively.

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Visit http://www.zacks.com/performance for information about the
performance numbers displayed in this press release.

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Zacks.com is a property of Zacks Investment Research, Inc., which
was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew
he could find patterns in stock market data that would lead to
superior investment results. Amongst his many accomplishments was the
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which continues to outperform the market by nearly a 3:1 margin. The
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Zacks Investment Research is under common control with affiliated
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may engage in transactions involving the foregoing securities for the
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Disclaimer: Past performance does not guarantee future results.
Investors should always research companies and securities before
making any investments. Nothing herein should be construed as an offer
or solicitation to buy or sell any security.

Zacks.com
Charles Rotblut, CFA
Phone: 312-265-9352
Email: pr@zacks.com
Visit: www.Zacks.com

Copyright Business Wire 2008