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3 Food Companies Trading Near 52-Week Lows

These financially strong companies are potential value opportunities

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Nov 18, 2021
Summary
  • My 52-week low screen has found consumer good products stocks with strong balance sheets and attractive valuations.
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Every living thing on the planet has to eat, so the consumer packaged goods space is a great place to look for value opportunities in any market environment.

These five food companies are trading near 52-week lows and are strong financially. Additionally, their balance sheets are rated A or better by Value Line. Currently, these defensive names are out of favor, so it could be a good time for investors to consider these dividend-paying stocks with wide moats.

Company Name

Ticker

Price

Value Line Financial Strength Rating

GuruFocus Financial Strength

% Change Price From 52-Week Low

18-Month Pricing Band

% Change Price From 52-Week High

McCormick & Co. Inc.

MKC

$83.48

A+

4

5.02%

35.00%

17.25%

Unilever PLC

UL

$52.01

A+

6

0.92%

15.00%

16.45%

Hormel Foods Corp.

HRL

$43.09

A+

6

7.26%

15.00%

17.31%

Saputo Inc.

TSX:SAP

CA$30.4

A

5

5.17%

25.00%

27.56%

Lancaster Colony Corp.

LANC

$164.62

A

7

5.40%

15.00%

18.79%

Conagra Brands

CAG

$31.99

A

4

1.00%

15.00%

17.50%

Out of these, McCormick & Co. Inc. (

MKC, Financial), Unilever PLC (UL, Financial) and Saputo Inc. (TSX:SAP, Financial) look the most appealing.

McCormick

McCormick (

MKC, Financial) is a spice and flavoring company. The stock is off about 20% from last year's high. The company benefited from the stay-at-home phenomena and all that home cooking, but it looks like the reopening trade is a bit overdone here. McCorimick is a very high-quality company, so I don't think we can expect too much of a bargain. But according to Value Line, we can expect it go up about 35% in 18 months. I think it’s a buy below $80, which is about the pre-pandemic price.

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The GF Value rates it as modestly undervalued.

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Unilever

Unilever (

UL, Financial) is a multinational food and consumer product company. Its particular strengths are developing countries, which have been hit hard by the pandemic but now are recovering. I think is a timely pick as the stock will recover as the economy continues to recover. It is also a good diversifier.

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The GF Value Line indicates modest undervaluation. The company is well below its pre-pandemic price. The dividend is outstanding at 3.9%, which the company has been growing at a healthy pace.

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Saputo

Saputo (

TSX:SAP, Financial) is a multinational dairy processor headquartered in Montreal, Canada (29% of sales) with operations in the United States (43%), the U.K. (6%) and other international markets (22%). It sells cheese, cream, milk and other dairy products. . Saputo also competes in food service (29% of revenue) and industrials (18% of revenue), which houses its ingredients business.

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The GF Value Line indicates moderate undervaluation. The company is selling far below pre-pandemic prices and is almost back to the level after the drop in March 2020. The dividend is pretty good at about 2.35% and company has been raising the dividend every year. The company is currently suffering from the inflationary impact of costs, which has squeezed margins. But the company is very well run and I expect that it will eventually be able to take price increases and get its profitability under control.

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Disclosures

I am/we are Long UL
The views of this author are solely their own opinion and are not endorsed or guaranteed by GuruFocus.com
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