If you’re looking for a new, meaty investment, you may want to consider Maple Leaf Foods Inc. (TSX: MFI). The company has gone into growth mode, battling competitors that threaten to reach into new spaces the company hasn’t hit yet. But not for long.
This defensive stock’s historical performance alone is enticing, but the company has a long-standing history of creating value for its shareholders through profits, share buybacks, and its dividend of 1.86% at the time of writing.
Yet the stock has recently been trending downwards, if only slightly, making now an ideal time to buy for interested investors. The weakness comes from the company’s first-quarter results, which were less than ideal. Profit came in at $50.1 million, with revenue growing about 11%, and sales totalling $907.1 million. So numbers were up, but they could have been better.
Yet those results came from the company’s move into growth mode — again, to create more value for its shareholders. While the company is growing the traditional way through acquisitions and overall growth, it is also growing into an entirely new space. Specifically: vegetarian options.
Shares have soared for companies that have embraced the creation of vegetarian products, with companies like Beyond Meat and A&W seeing its shares soar after breaking this type of news. In fact, A&W Revenue Royalties Income Fund shares hit its 52-week high last week, reaching $43 per share.
Not to be outdone, Maple Leaf also hit its 52-week high at $35.40 per share, but since then the stock has fallen back mildly to around $33 per share. Yet it’s making the same moves as these other companies. Maple Leaf now has a heavy investment in plant-based proteins, with the acquisitions to prove it. The acquisitions of Field Roast Grain Meat and Lightlife have turned the company into the highest distributor of any other brand in the U.S.
The acquisitions are just the start, as Maple Leaf has secured a $2 billion funding arrangement with lenders to continue its expansion plans. That makes right now the ideal time to buy this stock before shares soar once more.
If history is any indicator, investors should be convinced to buy now. In the last 10 years, returns have grown 267%, with its EBITDA margin growing from 10% previously to 16%. As for share price, in the last decade alone shares have rocketed from $8.27 per share back in 2009 to where they are at the time of writing at $33.35. That’s good for growth of over 300%!
If the future is any indication, investors should see that same kind of growth in both the short and long term. In the next 12 months alone, analysts expect the company’s shares to grow to $40, which means that an investment of $10,000 today could make you almost $2,000 in just 12 months.
But if you keep that money there for the next decade, you could be walking away with more than $30,000. That’s a profit of $20,000!
So while it might seem counter-intuitive, it looks like meeting the needs of meatless meals will create some soaring share prices for both Maple Leaf Foods and its shareholders over both the short and long term.
