Shares of Rogers Sugar (TSX: RSI), an $820 billion refined sugar firm not to be confused with the telecom company of the same name, have had really sweet gains in recent weeks. Now up close to 13% in the past month, Canadian mid-cap investors seeking a gem may wonder if the sugar rush is worth participating in. Undoubtedly, the sweet business of sugar production and distribution may be viewed as quite commoditized. But where Rogers Sugar stands out is its ability to do the job economically.
Indeed, it’s not as if anyone can simply step up and acquire all the necessary equipment to become a worthy rival. Given how things have been in the sugar market (no boom here, folks!), I have no idea why one would do such, especially as health and wellness trends look to take a bite out of sugar demand over time. In any case, Rogers Sugar looks poised to adapt with the times, especially with its robust portfolio of alternative sweeteners.
Indeed, coconut sugar, maple sugar, stevia, and other alternatives are bound to take the place of traditional refined white sugar over time. Indeed, with Donald Trump recently expressing his taste for healthier cane sugar colas, perhaps demand for such a sweetener could boom over time, providing Rogers an opportunity to diversify its book further as demand dynamics shift. Indeed, white sugar still pays a huge chunk of the bills, but over time, I see the mix gravitating more towards healthier alternatives.
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Rogers Sugar’s dividend looks sweet!
Though shares have not done a whole lot in the past five years, gaining just over 30% over the timespan, there is a tasty 5.6% dividend yield to collect while you wait. And while the stock chart is, by no means, enticing, RSI offers a steady payout and an incredibly low beta (currently at 0.77, which makes RSI shares slightly less correlated to the broad TSX Index).
With the latest upside surge in RSI (not to be confused with the Relative Strength Index technical indicator), the name is just a tad closer to experiencing a breakout, which has been many years in the making. For investors who are a tad worried about the potential for a bursting of the AI bubble, RSI stock stands out as a great place to hide.
Perhaps the top reason to consider buying a few shares of Rogers Sugar on its recent strength is the relatively modest valuation multiple. At the time of this writing, shares of RSI go for a mere 13 times trailing price-to-earnings (P/E). With a well-covered payout, RSI offers one of the most affordable five-plus percent dividends on the market right now, at least in my view.
Can the stock LEAP ahead?
Moving ahead, I’d look for Rogers Sugar’s LEAP project to keep on paying dividends. Indeed, expanding capacity while maintaining smooth operations is no easy task. Either way, management has proven worthy time and time again. I guess you could view it as a good time to leap into the shares while they’re still under the radar.
