AGT Food & Ingredients (AGT.TO)

Lentils and pulses. This has traced back from $40 down to around $30. A lot has happened with crops being locked in by weather and various other factors, but the long-term future for pulses, proteins and food ingredients is very good. Feels the company is getting more and more coverage. This is now at levels that are attractive, and he would be adding to any new accounts that came in.

Their key revolves around lentil and pulse crops for protein with non-animal source products. It ranks 279 in his database. Latest results have been modest. Sales increase is 9% and a 14% earnings increase. Earnings growth is forecast at 15%, against a PE of 12.9%. They are not free cash flow positive, which is why the stock has gone sideways.

The biggest lentil exporter in the world. There is the growth in healthy eating. It is a vast source of protein in India. They are moving into other grains. You buy this for a long term secular growth play, not for the yield.

It has less debt than last time around. She started picking away at it today. The Indian government insists crops get fumigated before going overseas. But we got an extension with the government to having to do this based on it being so much colder in Canada. And this is only 5% of their business. We have seen very large crops in Canada, India and Australia and that is putting pressure on the pricing. Don’t fixate on the fumigation issue. It is growing slower than investors would like to see it.

(A Top Pick Sept 16/16. Down 10.85%.) There is some question about New Delhi rejecting some imports because of fumigation. That has been a short-term deterrent for the stock, but overall, this company has so many orders that they couldn’t fill them. This is still a Hold.

The best time of the year for AG stocks is Aug. to the end of the year. Right now we are after the seasonal period. It is in a descending triangle and that is a bearish pattern. If it breaks down below the support level in this pattern, then you need to exit.

(A Top Pick Feb 1/16. Up 2.51%.) He likes the food sector, and has been fairly heavy in both retail food and this one. Thinks there is continued growth in this space. Any pulse that is high protein (not meat) has a huge growth market for it.

This has pulled back recently to the mid-$30. One of the main providers of pulses globally, and with the whole movement of the world toward more and more protein, they are exceptionally well positioned. They’ve also been expanding in their food ingredients and pasta areas. Geographically diversified with operations in Turkey, Canada and some in the US. Dividend yield of 1.68%. (Analysts’ price target is $44.)

Got a little undervalued. There were a couple of quarters where results were not as robust as they had been, and there were some concerns they had made too many acquisitions a little too quickly. The market for their product is huge, and they have great opportunities with some of their new processing plants and their new rail lines getting their product to market. Valuation is reasonable. Looking out a year or 2, he expects to see much higher prices. Dividend yield of 1.7%.

Playing in the growing category of pulses, beans and lentils, which are on trend with consumers’ tastes and preferences, and increasingly dietary restrictions. A robust growth story. He likes this.

This had really sold off in 2008, and he bought some early 2009, and rode it for a number of years, however it has too many styles of verticals, i.e. too many businesses, and there is really only one guy at the centre, the CEO. He is very talented, but he does too much within the business. Key Man risk is huge for this company. They can never fire out of more than 3 out of 6 cylinders. There seem to be a myriad of excuses of why they have never delivered. He will probably remain on the sidelines with this.

Has owned this for quite a while, and has a fairly low cost base on it. Lately it has started to come off into the mid-$30. At these price levels, it is something people can look at in safely buying. They are one of the largest processors of pulses globally. They’ve also expanded rapidly into food ingredients. Dividend yield of 1.69%. (Analysts’ price target is $44.)

(Top Pick Oct 31/16, Down 8.36%) It is a consumer staples stock and has been vulnerable to the rotation over the last 5 weeks. But it is a great growth play. There is a great growth runway ahead of them.

The united nations has declared this to be the year of the pulse. More and more consumers are opting for vegetarian diets, non-GMO foods, gluten free and so on. They have benefited from that tail wind as well as from their traditional grain handling facilities from record crops in pulse in Canada this year.

This does the whole pulse crops business. It corrected in the summer because they had some problems with crops. This is a pivotal Canadian company that he thinks will be making a bigger and bigger difference in portfolios as it grows and matures into more of a mainstream company. It’s on his radar.