Q: I have a position in Maple Leaf Foods which has been going nowhere. Would you add to the position or sell it and purchase another food stock? If so, which would you buy for stability and some income? Thank you for your guidance.
5i Research Answer:
MFI is expected to rebound in 2024 with EPS expected to see growth of 6.4x. Forward price-to-earnings is decent at 19.9x. Net debt is very high at $1.432B. Cash flows have fluctuated quite a bit over the last few quarters. The projection for a big bounce back in 2024 bodes well for MFI, but if stability and income is the goal, we think there are better options.
GIS is a good alternative for stability and income which currently trades at 14.5x forward price-to-earnings and pays a healthy dividend. Cash flows are also solid and relatively stable.