Saputo (TSX:SAP) is a Montreal-based company that produces, markets, and distributes dairy products in Canada and around the world. Shares of this top dairy processor have dropped 18% in 2021 as of close on November 29. The stock has plunged 29% over the past six months.
Today, I want to discuss why Saputo is worth snatching up on the dip. Saputo is a very stable business that investors can trust for the long haul. That makes it a solid defensive target, especially in this volatile environment.
The company released its second-quarter fiscal 2022 results on November 4. Revenues were mostly flat in the year-over-year period at $3.7 billion. Meanwhile, adjusted EBITDA dropped 23% year-over-year to $283 million. The company faced challenges in the form of "labour shortages, supply chain disruptions, and inflationary pressures" according to CEO Lino Saputo.
However, Saputo is still projecting that it will deliver on its adjusted EBITDA target of $2.12 billion by 2025. In the first six months of FY2022, revenues rose to $7.17 billion over $7.09 billion in the prior year.
Shares of Saputo last had a price-to-earnings ratio of 25. The stock is trading in favourable value territory in comparison to its industry peers. It possesses an RSI of 32, putting it just outside of oversold levels. Moreover, Saputo offers a quarterly dividend of $0.18 per share. That represents a 2.4% yield.
