I love chicken tonight

Local steak and seafood prices have risen significantly, which is music to the ears of the chicken industry and especially to Inghams.

Steak and seafood, for many, is now saved for special occasions. The alternative is shifting to a cheaper source of protein, which is chicken.

You can purchase a large chook at Coles and Woolworths for $10, enough to feed a family. Its laughable thinking that the equivalent $10 spent on steak or seafood will be sufficient.

Companies that can pass on increased production costs to consumers tend to perform well during periods of rising prices.

Inghams Group Limited (ASX: ING)

Inghams is Australia’s and New Zealand’s largest poultry producer that offers a range of products, such as crumbed chicken tenderloin, chicken nuggets and turkey breast, catering for all ages.

Inghams share price has proven to be a lagging indicator of chicken prices, meaning that if the price of chicken rises Inghams share price will likely follow. The cost of producing chicken has risen, largely due to increased energy and feed costs, which is not a concern for Inghams as the company has wiggle room for price increases without quantity demanded being affected. The upside for ING is large and we could shortly see this stock reach its $4.86 all-time high.

Inghams biggest customers are large grocery retailers, such as Coles and Woolworths, and mega franchises such as McDonalds and KFC. All of whom are going to continue demanding Inghams chicken regardless of price increases.

Jack Cowin, Hungry Jacks founder and billionaire, thoroughly researched changing trends in food consumption over a two-year period at 10 of his stores. The results found that chicken consumption is rapidly rising and has led to the Hungry Jack’s franchise formulating a new fried chicken burger range.  When a key player, such as Jack Cowin, is bullish on the chicken industry it’s an extremely positive sign.

Strong product demand and an attractive pricing environment make Inghams a serious portfolio contender.

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