George Weston Limited (TSX:WN), the largest food processor and distributor in Canada, has the potential to be one of the market’s top performing stocks in both the short and long term. Let’s take a look at three of the primary reasons why and why you should consider establishing a position today.

1. Strong first-quarter results to support a short-term rally

George Weston released better-than-expected first-quarter earnings results before the market opened on May 12, and its stock has responded by rising over 1% in the trading sessions since. Here’s a breakdown of 12 of the most notable statistics from the report compared with the year-ago period:

  1. Adjusted net income increased 30.6% to $162 million
  2. Adjusted earnings per share increased 33.7% to $1.19, which surpassed analysts’ expectations of $1.15
  3. Total revenue increased 36.7% to $10.41 billion, which surpassed analysts’ expectations of $10.39 billion
  4. Revenue increased 37.8% to $10.05 billion in its Loblaw segment
  5. Revenue increased 12.2% to $504 million in its Weston Foods segment
  6. Adjusted earnings before, interest, taxes, depreciation, and amortization (EBITDA) increased 55.1% to $850 million
  7. Adjusted EBITDA margin expanded 100 basis points to 8.2%
  8. Adjusted operating income increased 73.9% to $586 million
  9. Adjusted operating margin expanded 120 basis points to 5.6%
  10. Cash flow from operating activities increased $515 million to $517 million
  11. Free cash flow increased $357 million to $81 million
  12. Ended the quarter with $1.39 billion in cash and cash equivalents, an increase of 4.5% from the beginning of the quarter

The very strong results above can be primarily attributed to Loblaw’s $12.4 billion acquisition of Shoppers Drug Mart, which closed in March 2014 and contributed $2.6 billion of revenue, or 92.8% of George Weston’s total revenue growth in the first quarter.

2. The stock trades at very inexpensive forward valuations

At today’s levels, George Weston’s stock trades at just 17.7 times fiscal 2015’s estimated earnings per share of $5.78 and only 15.4 times fiscal 2016’s estimated earnings per share of $6.64, both of which are very inexpensive compared with its five-year average price-to-earnings multiple of 27.7.

I think the company’s stock could consistently command a fair multiple of at least 20, which would place its shares upwards of $115.50 by the conclusion of fiscal 2015 and upwards of $132.75 by the conclusion of fiscal 2016, representing upside of more than 12% and 29%, respectively, from current levels.

3. A management team dedicated to maximizing shareholder returns

George Weston pays a quarterly dividend of $0.425 per share, or $1.70 per share annually, giving its stock a 1.7% yield at today’s levels. A 1.7% yield is not high by any means, but it is very important to note that the company has increased its dividend for four consecutive years, and its increased amount of free cash flow could allow this streak to continue for the next several years.

Is there a place for George Weston in your portfolio?

I think George Weston could be one of the market’s top performing stocks in both the short and long term. It has the support of strong first-quarter earnings results, its stock trades at inexpensive forward valuations, and it has shown a strong dedication to maximizing shareholder returns through the payment of dividends. Foolish investors should take a closer look and strongly consider beginning to scale in to positions.

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Fool contributor Joseph Solitro has no position in any stocks mentioned.