This post is part of our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered.

Ah, Spam. Doesn't the word make your mouth water? Or maybe not. Either way, Spam must be given its due. It is the most famous of the mystery meats, those exciting concoctions of the meat-packing industry. It has been sold by the billions of cans since its invention in 1937. It helped feed the Allies and win World War Two. It is central to a Monty Python skit about Vikings in a greasy spoon, and now a Broadway musical. It provides a name for unwanted e-mail. It theoretically lasts forever. And it is a product of the Hormel Foods Corporation (NYSE: HRL).

Spam is made in several places, but its ancestral home and main production facility is in Austin, Minnesota, sometimes called Spam Town. Austin is the small town south of Minneapolis that is home to Hormel, proud maker of all things Spam. (I should note that Hormel would prefer that we write "SPAM luncheon meat" but I don't think we'll take that suggestion too seriously.)

Hormel has long dominated the town of Austin, and not just because the Spam Museum is located there. It is by far the largest employer in town and the majority of workers in Austin work for Hormel, producing many of the company's meaty foods. Hormel's roots in the town go deep. Drawn by the town's good rail and river access, George A. Hormel opened a meat packing business there in 1891, and his small company eventually grew into the billion-dollar colossus that today owns a dizzying array of food brands, from Chi-Chi's and Valley Fresh to Dinty Moore and, of course, Spam. (Does it seem fair that one company gets to own both Dinty Moore and Spam?)

George Hormel was a classic 19th century American man of business. He started from scratch and invented a new product, the canned ham, that changed the way people consumed food. He earned great wealth and ruled over his company and his home town as a benevolent dictator, paying good wages in his plants while establishing civic organizations for the benefit of all citizens. But as happened with so many other small companies that became very large, that personal relationship between town and company was eventually lost. A long and bitter strike at the main Hormel plant in Austin in the mid-1980s drove that point home, especially when the company called in the National Guard against the strikers. By most accounts, the effects of that strike still linger, and the company town of Austin, Minnesota, has lost some of that old-fashioned charm that once seemed to protect it from the ravages of global capitalism.

Be sure to check out more Big Company, Small Town posts.

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In tough financial times, certain food products and food preparation ideas seem to gain increasing favor with consumers. People try to find ways to prepare nutritious and interesting meals while gaining greater purchasing power from their hard-earned dollars.

Just the other day, some of us bloggers were engaged in a lively email chat regarding some of our tried-and-true strategies for stretching our grocery dollars. As you can guess, ramen noodles almost immediately took center stage. I was entertained with stories of the many ways that the slender pasta can be made quite appealing. For instance, if you take any brand of chunky salsa, cut it 50% with water, add a sliced hot dog and pour the heated mixture over the noodles, it's really a very delicious and satisfying meal.

As the discussion ebbed, I couldn't help but be amazed that no one had mentioned SPAM, by Hormel Foods Corp. (NYSE: HRL). Surely, I thought, these people must know about the illustrious history of SPAM! Could they ignore the fact that SPAM has carried literally millions of people though hard times since prior to World War II? Though there is probably a ratio of three SPAM jokes to every one SPAM recipe, the fact remains that Hormel's SPAM, in all its variations, still sells exceptionally well. It sells even better as times get tough, as indicated by a recent Associated Press overview.

The May 28 earnings call from Hormel Foods Corp., as provided by Seeking Alpha, stands as testament to exactly why I like the company. Corporate transparency coupled with deeply thoughtful, knowledgeable and expressive leadership makes this company easy to look into. For the first half of 2008, Hormel Foods Corp. is again performing in defiance of tumultuous economic forces and is referred to by The Motley Fool as an inflation-defeating stock.

You might consider putting Hormel Foods Corp on your list of stocks to float you through this tough phase of the financial cycle. The company's stock is currently selling at what I would consider to be a mild discount. Analyst consensus on Hormel Foods is currently pegged as a very strong "hold." At the very least, I can promise you that the idea of purchasing Hormel shares right now would be quite a bit more palatable than a Twinkie sandwich could ever be.

Gary Sattler is a freelance blogger. He has no financial interest in the companies mentioned in this blog post. This blog post was in no way solicited or compensated by Hormel Foods.

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The Associated Press reports that Spam sales are on the rise. Cans of Spam -- a pig byproduct -- are flying off the shelf as consumers are turning more to lunch meats and other lower-cost foods to extend their already stretched food budgets.

As I posted, consumers are going on a recession diet. I had not thought of Spam as a way to play this trend. But its sales are up 10.6% and its manufacturer, Hormel Foods (NYSE: HRL) has seen its profits rise 14%. But the price of Spam is up more than Hormel's stock, with the average 12 oz. can costing about $2.62. That's an increase of 17 cents, or nearly 7% from the same time last year.

Despite rising prices, Spam seems like a good alternative to consumers. AP quotes Kimberly Quan, a stay-at-home mom of three, who has been feeding her family more Spam in the last six months as she tries to make her food budget go further. "It's canned meat and it's in the cupboard and if everything else is gone from the fridge, it's there."

Spam was good enough for Allied troops in WW II. Yet Hormel stock is up a mere 4% in the last year. With earnings expected to rise 8.6% on a P/E of 16, the stock is not cheap.

So you need to decide: Is Spam good enough for your family and its stock portfolio?

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Aeropostale Inc. (NYSE: ARO) posted strong Q1 results on increased same-store sales.
• Analog Devices Inc. (NYSE: ADI) reported solid Q2 results and raised its Q3 guidance.
• BMC Software Inc. (NYSE: BMC) Q4 results beat estimates and it raised its full-year guidance.
• Charming Shoppes Inc. (NASDAQ: CHRS) posted a Q1 loss its worst sales decline in years.
• Ford Motor Co. (NYSE: F) warned that it doesn't expect 2009 profit despite some strength overseas.
• Gymboree Corp. (NASDAQ: GYMB) reported strong Q1 results due to higher retail sales.
• Hormel Foods Corp. (NYSE: HRL) posted solid Q2 results that beat Wall Street estimates by a penny.
• Intuitive Surgical Inc. (NASDAQ: ISRG) warned that it might not meet expectations for 2008.
• Limited Brands Inc. (NYSE: LTD) disappointing Q1 results were offset by a one-time sale of an asset.
• PetSmart Inc. (NASDAQ: PETM) posted weak Q1 results that beat estimates, and offered weak guidance.
• Salesforce.com Inc. (NYSE: CRM) reported strong Q1 results that led to analyst upgrades.
• Talbots Inc. (NYSE: TLB) restructuring costs and soft same-store sales dragged down Q1 earnings.
• Toro Co. (NYSE: TTC) Q2 profits and revenues declined but beat low expectations of analysts.

Additional earnings highlights:
Home Depot, Gap, Lenovo, Air France, Activision, Suntech and others
Hewlett-Packard, Target, Barnes & Noble, Campbell, Staples and others

Upcoming results to watch for include Borders (NYSE: BGP), Polo Ralph Lauren (NYSE: RL), TiVo (NASDAQ: TIVO), Big Lots (NYSE: BIG), Costco (NASDAQ: COST), Dell (NASDAQ: DELL), HJ Heinz (NYSE: HNZ), Sears (NASDAQ: SHLD), Lions Gate (NYSE: LGF), and Tiffany (NYSE: TIF).

Visit AOL Money & Finance for more earnings coverage.

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Hormel Foods (NYSE: HRL), a foodstuffs processor whose colleagues include ConAgra Foods (NYSE: CAG) and Kraft (NYSE: KFT), issued its Q2 numbers on Thursday. Revenues jumped 6% to $1.6 billion, although the growth rate was only 4% if you look at just the amount credited to organic appreciation. Net earnings per diluted share rose 14% to $0.56 per share. Volume jumped 5% altogether, and 3% based on, once again, organic growth.

This wasn't a bad earnings report for a major supermarket brand, although it certainly wasn't overly stimulating, either. So, you wanna take a guess as to by how much Hormel beat earnings expectations? If you said "by the proverbial penny," then you just might be a Wall Street junkie! Seems like so many companies got the penny-thing down pat. Anyway, Briefing.com not only said that earnings were better by a penny, but that revenues came in pretty much as expected.

Basically, Hormel is trying to navigate this inflationary environment as best it can. As we all know, it's pretty competitive out there in the grocery aisles even during prosperous periods. But take a look at the cash-flow statement and you'll see that the company did pretty well in terms of net cash from operations. That metric soared almost 30% over the six-month period. Only problem is, not too much was left over after capital expenditures and dividend payments were taken into account. Still, Hormel seems reasonably fine for now on the cash-flow front.

I'm not necessarily interested in Hormel's stock at this time. If I wanted to get in, I certainly would look to pick up shares at a higher yield; there are better opportunities out there for dividend yield, in my opinion. As Joseph Lazzaro observed a couple months back, Hormel is definitely an interesting defensive name during challenging economic times, and I did enjoy the double-digit bottom-line growth. I just think investors would be better off if this one came down a bit in terms of share price.

Disclosure: I don't own shares in any company mentioned here; positions can change at any time.

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• At 8:30 a.m. EST, the Labor Department will report January import and export prices.
• At the same time, the Empire State Index will be released, giving an idea of the region's manufacturing activity.
• At 9:15 a.m. EST, January industrial production and capacity utilization will be released.
• At 10:00 a.m. EST, the University of Michigan will give its preliminary reading on consumer confidence in February.

• Reporting today arefood companies Campbell Soup (NYSE: CPB) and Hormel Foods (NYSE: HRL) as well as Abercrombie & Fitch (NYSE: ANF).
• Chipotle Mexican Grill (NYSE: CMG) share dropped over 13% in after-hours Thursday and may drop this morning after the restaurant owner reported fourth-quarter earnings that didn't grow as fast as forecast.

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Smithfield Foods (NYSE: SFD) is the largest hog producer and pork processor in the world, offering fresh pork, smoked and boiled ham, bacon, sausage, hot dogs and ready-to-eat foods. Products are sold under such brand names as Smithfield, John Morrell, Cumberland Gap, Patrick Cudahy, Cook's Ham and Armour-Eckrich Meats. Smithfield is also the fifth-largest beef processor in the United States. Hormel Foods (NYSE: HRL) and Tyson Foods (NYSE: TSN) are major competitors.

The company surprised the Street late last month when it reported fiscal Q2 EPS of 24 cents and revenues of $3.46 billion. Analysts had been looking for 21 cents and $3.28 billion. Management noted that packaged meat profit margins more than doubled and earnings from international meat processing rose sharply. The SFD price popped on the news and then moved into a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

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Almost six million pounds of ground beef suspected of harboring E. coli bacteria has been recalled by United Food Group LLC. The bad beef was sold throughout the West in groceries including Albertson's, Trader Joe's and Sav-A-Lot, under brand names Moran's All Natural (too natural, if you ask me), Miller Meat Company, Stater Bros., Trader Joe's Butcher Shop, Inter-American Products Inc. and Basha's. Fourteen cases of E. coli illness have been linked to the beef since April 25.

Last year, the U.S. population consumed 28 billion pounds of beef, from almost 34 million head of bovine, worth in excess of $37 billion. While the United Food Group is an LLC, the specter of contaminated beef could impact publiclly traded beef vendors such as Hormel Foods (NYSE: HRL) and Smithfield Foods (NYSE: SFD) as well.

To put the magnitude of this recall in perspective, if we assume the average American adult weighs 175 pounds, it represents the weight of 34,285 people -- the entire population of Beverly Hills, CA, or Panama City, FL or Rome, NY.

The news comes at a particularly vulnerable time for the U.S. export market, as China is vigorously responding to the criticism of its food processing in the tainted pet food scandal by placing American food imports under the microscope. Over the weekend, Chinese officials rejected a shipment of American pistachios because they found ants among the nuts.

United Food Group has set up a hot line to answer questions about the recall, 1-800-325-4164.

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Spam, Hormel Foods' (NYSE: HRL) legendary pork-based canned meat product, is still a staple in Hawaii, a fact that has not escaped the attention of fast food giants McDonald's (NYSE: MCD) and Burger King (NYSE:BKC). In its island restaurants, McDonalds offers the McSpam sandwich, and in 2002 added the pigalicious treat to its breakfast menu. Its Spam platter consists of Spam, scrambled eggs and rice.

Now Burger King has jumped into the Spam war by launching its "Spam in the A.M." campaign. Hawaii BKs are offering a similar platter selection, as well as Spam on a croissant or biscuit.

According to the AP, Hawaii is the leading consumer of Spam, averaging six cans per person annually. Before you jump to conclusions, let me point out that, according to the CDC, in mainland U.S. states the percentage of adults overweight or obese ranges from 52.9% (Colorado) to 65.5% (Mississippi), while Hawaii reports only 49.5% of their residents fall into this class. And it's hard to imagine a Spam sandwich could be more damaging to one's waistline than BK's 730-calorie Enormous Omelet Sandwich, available throughout the U.S.

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After reading Tom Barlow's post on the Chinese Strategic Pork Reserve mentioned in the Wall Street Journal (subscription required), I couldn't resist throwing the new intern in to do a little more research on this exciting topic.

The US Strategic Oil Reserve has enough crude cover oil imports and run the entire country for about two months. How does the Strategic Pork Reserve stand up to that?

The numbers the intern pulled up indicated that there are 1.65 million hogs in the Chinese strategic pork reserve. Is it called the piggy bank? Wow that sounds like a lot of meat; but wait there are a lot of Chinese people too. And how big is a pig? An average hog dresses out at 133 pounds of edible meat. There are 1.3 billion people in China. This means that for every 788 Chinese there is one hog in the reserve. That comes out to about 2.7 ounces of bacon per Chinese person.

I was about to say I hope there is a strategic egg reserve to go with that -so one could have at least bacon and eggs- but eggs don't keep that well. Maybe there is a strategic pancake reserve so they can at least have a full meal for breakfast.

Maybe the Strategic Pork Reserve is just another pet pork project (Sorry, couldn't help it). That is simply not enough pork to make a big difference and could only cover one meal. It may make people -especially the politicians- feel good and the threat of dumping it all on the market at once might temporarily lower prices; but we are just not talking about that much meat.

High pork prices are good for farmers and lots of agriculture companies like Monsanto (NYSE: MON), Smithfield Foods (NYSE: SFD), Hormel (NYSE: HRL); hopefully there will be enough to go around and we won't be reading about Pork Riots in a few months. You may think I am crazy, but it wasn't that long ago when there were tortilla riots in Mexico.

Kevin Kersten is an Options Analyst with InvestorsObserver.com. Do you have any deadwood in your portfolio? Check out the 18 Warning Signs That Tell You To Dump A Stock.

Disclosure note: Mr. Kersten owns and or controls a diversified portfolios of long and short positions that may include holdings in companies he writes about.

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He says there is nothing more defensive than cigarettes. Altria Group (NYSE:MO) is breaking up and he notes that it already went when-issued today and he said the when-issued (MO-WI) shares are his No. 1 Pick right now. We discussed this today, plus the implications of how that will affect the larger DJIA components. Cramer wants you in the MO-WI shares ahead of the event but he doesn't want you in the Kraft Foods (NYSE:KFT) shares. He doesn't hate KFT, he just doesn't love it and in food he likes General Mills (NYSE:GIS), Kellogg Co. (NYSE:K) and Heinz (NYSE:HNZ). He thinks the MO-WI shares are actually about $10.00 undervalued. He likes the dividend at 4.4% after the spin-off and the pure-play on tobacco, and he likes that you can compare these directly to competitors now in tobacco.

Jon Ogg is a partner in 24/7 Wall St., LLC; he does not own securities in the companies he covers.

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According to a federal indictment alleging 25 counts of coupon-redemption fraud, nine executives from International Outsourcing Services (IOS), the nation's largest clearinghouse for grocery- and retail-related coupons, have been accused of involvement in an ongoing coupon-redemption scheme that is claimed to have injured a laundry list of companies, including SC Johnson, Kimberly-Clark Corp.(NYSE:KMB), and Winn-Dixie Stores (NASDAQ:WINN). Federal attorneys claim that Wisconsin firms alone have been bilked as much as $15 million by fraudulent redemption practices. Coupon redemption program assistance organizations estimate that fraudulent coupon redemption costs product manufacturers as much as a half billion dollars a year.

A news story reports that in answering the indictment, IOS denied the allegations and said the company plans to "vigorously defend against these charges." IOS takes a firm stand that through a 40 year history of providing its services, it has never faced tort action in regard to its coupon-redemption practices, even in the face of routine audits performed by the many of the manufacturers it serves.

U.S. attorneys maintain that the indictment is the result of a long-standing and intensive investigation by members of the U.S. Attorney's office, with additional resources and support provided by the FBI and others. Already, 17 individuals have been charged and convicted in Wisconsin, 10 in Ohio, and 3 in Mississippi in connection with this investigation. Law enforcement indicates that the previous convictions involved an independent broker and an IOS sales manager.

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The markets have continued with a moderate rally. Bernanke continued speaking before Congress with investors getting more confident that interest rates are going to stay unchanged. There was a jump in the Jobless numbers last week with 357,000 new first time unemployment claims compared to 313,000 the week before. Bad winter weather was blamed for the increase so investors were not overly concerned.

The NYSE had volume of 2.2 billion shares traded with 1,929 issues advancing while 1,335 declined for a gain of 7.65 to 9,434.96. On the NASDAQ, 1.8 billion shares were traded, 1,521 stocks advanced and 1,516 declined for a gain of 8.72 to 2,497.10.

Stocks moving today included Palm Inc. (NASDAQ:PALM) up to $1.06 (6.8%) to $16.45. RealNetworks Inc. (RNWK) dropped $1.70 (17%) to close at $8.97 on weak outlook.

All February equities options expire tomorrow since it is the third Friday in the month. Call options on Hudson City Bancorp (NASDAQ:HCBK) were active on the July 15 strike (KHQGC) with over 60,000 traded. The stock was downgraded today, but this looks like a longer term bullish bet on the stock. The QUALCOMM Inc. (NASDAQ:QCOM) March 42.50 calls (AAOCV) had over 40,000 contracts moving across the tape. QCOM broke through its 200 day moving average and may break out of a 6-month trading range to the upside. Put options on Altria Group (NYSE:MO) were also active with the March 85 moving 43,000 contracts. There were 3.5 million puts and 4.8 million calls moved for a put/call ration of 0.73.

Tomorrow we will see Housing Starts and Producer Price Index data at 8:30 AM EST. At 10:00 AM Consumer sentiment numbers will be released. Earnings will be coming out on Campbell Soup (NYSE:CPB), Good Year Tire & Rubber (NYSE:GT) and Hormel Foods (NYSE:HRL).

The Kevin Kersten is an analyst with InvestorsObserver. DISCLOSURE NOTE: Mr. Kersten owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about.

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Hormel's young CEO, Jeffrey M. Ettinger, thinks the company can bridge the gap; but the company's immodest success using its own brand name to market ethnic food is just one indication that the public has a long memory and can never separate Hormel from its iconic Spam. In fact, all of its ethnic products are sold under alternate brand names, like Chi-Chi's Mexican food, Carapelli Italian products, and Patak's Indian varieties.

It's hard for a company like Hormel to ignore the growing market for foods that are closer to the earth, with fewer ingredients and, yes, less shelf-stablization. There's something a little freaky about a meat product that can survive for decades, and America's consumer is growing more and more certain of that. Yet, at the same time, I (for one) can never get Spam out of my mind. That's not necessarily a bad thing -- Hormel should embrace its connection with one of America's great symbols of food product. While at the same time not trying to reach too far. The Wall Street Journal notes a new ad campaign that suggests customers make penne pasta with Hormel Chili -- sorry, that's going entirely too far. In fact, I wrote a spamku about it:

Hormel does Spam well
and Billy loves its chili
But gourmet? No way!

[Photo everett taasevigen]

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