With the Covid-19 pandemic, our food supply and the companies that operate in the food supply chain have come into focus for investors in a way that may not have come to be without this economic shock. In Canada, companies like Maple Leaf Foods (TSX:MFI) are integral players in this space, and have performed quite well as defensive options to combat the uncertainty which is rampant in today’s economy.
Maple Leaf has continued to grow organically through this pandemic having shifted a great portion of its focus to investing in the food products of the future. The company generates excellent free cash flow, and has been investing a significant amount of its free cash flows into plant-based food and meat alternatives, a trend which pre-dated the coronavirus pandemic, but which has become more important for many consumers now looking for alternatives in their shopping carts each week.
Given Maple Leaf’s size and strength of the company’s balance sheet, I believe the company’s management team will be focused on supplementing its organic growth with bolt-on acquisitions as they become available.
Plant-based food companies have been popping up like crazy as consumers shift their food preferences, and many larger traditional players in the food supply chain such as Maple Leaf continue to be behind the curve to a degree, making such acquisitions likely. Maple Leaf is thus an interesting play for investors looking for a company with size and cash flow stability with future growth verticals available via acquisition in the future.
Invest wisely, my friends.
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