Mad Money

High on the Hogs

Get ready to love the other white meat, Cramer said on Wednesday’s Mad Money.

Cramer: Buy Hormel

The pork business has become very attractive as hog prices fall, beef prices soar and people “trade down” for pork. Those are some pretty good signs for pork producers Hormel and Smithfield Foods , Cramer said.

The hog glut, as he called it, is a simple product of the U.S. producing many more hogs than was expected, driving prices lower. We have a lot more hogs on our hands thanks to imports from Canada and a lack of significant exports to China. Even rising grain prices can’t slow down our hog glut, Cramer said.

Grain prices are, however, the reason why beef has become so expensive. A lot of grain translates to not that much steak and people are feeling the pain in the grocery aisles.

Hormel’s fundamentals look sound, too. It has significantly less debt than Smithfield and a pristine balance sheet. If hog prices stay so low, Cramer thinks Hormel could go to $48. If prices do rise, he sees only $3 of downside.

Watch the video for details on the hog glut (and see the special guest who visited Cramer on set).

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