SFD operates as a producer, manufacturer, marketer, seller & distributor of a variety of fresh pork and processed meat products both domestically and in Canada, Poland, France, Japan & Mexico. For the 39 weeks ended 1/28/01, revenues rose 17% to $4.39B. Net income totaled $170M, up from $46.6M. Results reflect an increase in average unit selling prices in the Hog Production Group and the inclusion of a $76.5M gain on the sale of stock.

March 22, 2001

Smithfield Foods is a vertically integrated pork and processed meat producer. The company offers hog production and fresh pork products such as hams, hot dogs, loins and ribs. Shares of SFD have been moving higher over the past year after hitting a low of $14.88 on 2/24/00. The stock traded to a 52-week high of $33.30 on January 2nd after Smithfield lost a bidding war with Tyson Foods (TSN) over the acquisition of IBP Inc. (IBP). Since then, SFD has traded in the $27-$33 range. The stock is currently on a run from a relative low of $27.85 on March 1st. With that said, we believe that SFD could be ready to break through its trading range as the US pork industry benefits from the European livestock disease crisis that has wiped out most of the European pork products. From a technical standpoint, support is the 5-dma at $32.02 with additional support at Thursday’s intra-day low of $31.20. Resistance is Wednesday’s intra-day high of $32.80 and then the January 1st intra-day high of $33.30. Look for entry points on a bounce off of $32.02 or a move above $32.80 on volume greater than 130,000 shares by noon. We plan to set stops at $29.75 to limit potential losses.

Picked on March 6th @ $32.25
Change since picked +0.00
Stop Loss @ $29.25