Part 4

Tyson Foods (TSN)

Company Background

Tyson Foods, Inc. is an American multinational corporation based in Springdale, Arkansas, that operates in the food industry. The company is the world’s second largest processor and marketer of chicken, beef, and pork after JBS S.A. and annually exports the largest percentage of beef out of the United States. Together with its subsidiaries, it operates major food brands, including Jimmy Dean, Hillshire Farm, Ball Park, Wright Brand, Aidells, and State Fair.Tyson Foods ranked No. 79 in the 2020 Fortune 500 list of the largest United States corporations by total revenue.

Current position – Financial Performance & Future Growth Prospects

With people spending much more time at home throughout the last 12 months the company’s retail channel has gained a lot of momentum from higher at-home consumption. The global COVID-19 pandemic has also sped up the digitzation of the global economy, which has made people much more inclined to buy online. This has also proven to be a tailwind for Tyson Foods’ e-commerce channel as it has also performed strongly. Apart from these, the company is benefiting from brand strength and robust geographical reach. The company has also been actively working on enhancing operational efficiencies. Tyson Foods is very well position to be successful in various different economic environments as the products that it sells are always going to see strong demand as chicken, pork and beef are the most essential components of almost every diet out there. This makes it a great Consumer Staple stock, that could provide additional diversification to your portfolio.

Tyson Foods sees a consistently rising demand for protein-packed foods, which the company aims to capitalize on by further optimizing and increasing its production capabilities.

In reality, Tyson Foods has a pretty solid portfolio of protein packed brands even as it is and most of these brands are experiencing a strong growth momentum globally. However, the company wants to further solidify its dominance in the industry that it operates in, thus it continues to look for ways to expand its reach. With more and more people jumping on the “healthy lifestyle” train in recent years, there has been a substantial increase in the demand for organic, natural, fresh meat and Tyson Foods has positioned itself quite nicely by expanding its fresh prepared foods offering. The plant-based protein meals have also gained a lot of popularity as of late and as a result of that Tyson Foods announced that it is planning to roll out a range of plant-based products in chosen retail markets and digital platforms in Asia Pacific under First Pride brand. Certainly, the introduction of plant-based alternatives in the region brings Tyson Foods closer to its objective of building an impressive portfolio of plant protein brands.

Technical Analysis

TSN has been in a clearly defined long-term sideways channel since early 2016. From 2012 to 2016 the stock more than quadrupled in price moving from the $15 range up towards $70 per share. However, since then the stock has been all over the place within the $50-90 range. There were years when the company and respectively the stock were doing fine, followed by years of continuous stock price declines and company problems. Last year, we saw the stock bottoming at around $42 per share in the COVID-19 stock market crash in March, 2020. As a meat producer, distributor and marketer Tyson Foods is a leader in the space that it operates in. Furthermore, the company has continued to upgrade its portfolio of products with respect to the always changing tastes and preferences of its consumers, which makes TSN’s stock extremely attractive for both institutional and retail investors. The stock has managed to appreciate from the $42 lows all the way up to the $80 level breaking few key resistances along the way. This represented an impressive 90% stock price increase in exactly 12 months. However, the stock has been in a downward corrective movement since mid-May this year. It is currently resting right above its 200-day EMA dynamic support zone. The long term bullish momentum behind the stock is quite strong and it will most likely continue to push the price higher in the future. However, the key technical level to watch at the moment is $82 as a potential upward break there could easily open up the door for a move up to $95 and $105 respectively. We can see clearly from the Daily chart of the stock that it has been in the process of accumulating a lot of additional bullish interest in recent weeks, as it has been building a very meaningful base around the $72 level. The stock is currently trading at its 5, 20, 50 and above its 200-day EMAs with the RSI and Stochastics oscillators retracing upwards from oversold conditions. This shows that if the 200 EMA gets clearly broken to the downside, the stock might drop down towards the $60 support area. However, the long term path of least resistance remains to the upside and any dips towards any of the strong dynamic and/or static support levels, should be used as a buying opportunity. We will stay bullish on the stock and will be interested in buying any dips for as long as the stock stays above the $70 psychological support zone. A potential break there could easily send the stock down towards the next major support at $60, thus we would be exiting our positions if the $70 support breaks.

Boston Properties (BXP)

Company Background

Boston Properties, Inc. is a publicly traded real estate investment trust that invests in office buildings in Boston, Los Angeles, New York City, San Francisco, and Washington, D.C. As of December 31, 2019, the company owned or had interests in 196 commercial real estate properties, aggregating approximately 52.0 million net rentable square feet.

Boston Properties owns and develops Class A office real estates in the United States for high-end business and government organizations like government agencies, financial services and law firms as well as businesses involving technology, advertising, media, life sciences and medical devices. The company also owns interest in 13 retail properties, six residential properties and a hotel.

One of the things that makes Boston Properties more stable as a company during uncertain economic times is the fact that the company concentrates on a few select high-rent, high barrier-to-entry geographic markets that usually fare better in an uncertain economy.

Current position – Financial Performance & Future Growth Prospects

In a time when stocks have gone up, yields have come down and everybody is searching for growth, Boston Properties offers a very attractive dividend yield of 3.4%. The company supports that payout with one of the largest portfolios of office properties in the country.

While last year was quite tough for the office market as a result of the pandemic it has been interesting to see that occupancy levels and rental rates actually held up reasonably well throughout that time because most companies expect to return to their offices once its all said and done with COVID-19.

It is true that the COVID-19 pandemic has basically forced every single company to offer a work-from-home option to its employees and that many people will be choosing to work remotely in the future. However, companies have also realized that offices are a vital tool for creating corporate culture and identity, training, innovation, and winning clients. Thus, most companies have continued to pay their office leases even though they didn’t physically occupy the space. That enabled Boston Properties to generate relatively steady cash flow to support its dividend.

In the meantime, the company has continued to make steady progress on its new development projects. BXP currently has $2 billion of office developments underway and has already pre-leased 86% of the available space. On top of that, it’s investing another $558 million into life science redevelopment and development projects, as that industry expands as a result of the pandemic.

Those investments will generate more than $200 million of incremental income for the REIT, once complete. Boston Properties has always stood out with a best-in-class balance sheet, which will continue to get stronger as all of the current business initiatives of the company will secure stable and sizable revenues for the years to come. As a result of that, the REIT should be able to grow its already compelling dividend in the future, as it has routinely done over the years.

Technical Analysis

BXP has been in a clear uptrend ever since it finally bottomed back in October, 2020. The stock was moving in a rather slow, steady and stable manner within the $100-125 range before the COVID-19 pandemic hit. However, the stock broke below the $100 support of the range and basically collapsed with the rest of the market. The stock bottomed at around $68 per share after the COVID-19 stock market crash in March, 2020. As a well-managed REIT with a solid portfolio and with a great long-term growth trajectory, BXP’s stock has been extremely attractive for both institutional and retail investors. REITs usually provide their investors with a relatively slow and steady capital appreciation of their investments, as the real estate investment trusts are considered to be lower volatility investments. However, as a result of last year’s market shock BXP’s stock has managed to appreciate from the $68 lows all the way up to the $123 level. This represented an outstanding 81% stock price increase in exactly 15 months. However, the stock has been in a downward corrective trajectory since mid-June this year. It is currently resting right above its 50-day and 200-day EMA dynamic support lines. The long term bullish momentum behind the stock is quite strong as well as the actual business of the company, which will most likely continue to push the price higher in the future. However, the key technical level to watch at the moment is the $123 horizontal resistance as a potential upward break there could easily open up the door for a move up to its pre-COVID highs around $140 per share. We can see clearly from the Daily chart of the stock that it has been in the process of accumulating a lot of additional bullish interest in the last few sessions, as it has been building a meaningful base around the $113 level. The stock is currently trading at its 5, 20, and above its 50 and 200-day EMAs with the RSI and Stochastics oscillators retracing upwards from oversold conditions on the daily chart. This shows that if the 500 EMA around $113 gets clearly broken to the downside, the stock might drop towards the next strong support at by the 200-day EMA at around $103 per share. However, the long term path of least resistance remains to the upside and any dips towards any of the strong dynamic and/or static support levels, should be used as a buying opportunity. We will stay bullish on the stock and will be interested in buying any dips for as long as the stock stays above the $100 psychological support zone. A potential break there could easily send the stock down towards the next major support at $88, thus we would be exiting our positions if the $100 support breaks.

Sincerely,

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