Sven Carlin: Food Stock Ingredion Offers A Double Digit Yield (Buybacks + Dividend)

by Sven Carlin

Summary

Ingredion could be a defensive food stock offering growth and a high yield.

The dividend yield is 2.7% while the buyback yield for 2018 was 10%.

Given the PE ratio of just 13 combined with expected earnings growth of 8% per year, one could expect double digit returns in the coming years.

Food companies are interesting investments and usually considered defensive stocks because no matter what happens, we will still need to eat. Usually such businesses are slightly over-priced, often having a higher valuation than the market’s average, but sometime you can get such defensive, growth businesses at lower prices.

Ingredion (INGR) is a company producing starches, sweeteners and specialty ingredients for the processed food industry. Given the unfortunate trend of looking for convenience when buying food, demand for processed foods is expected to grow in the future, especially in emerging markets. INGR is well positioned to capture that growth with its know how.

Processed foods

From an investment perspective, the company boasts strong cash flows, offers a dividend of 2.7% and is very active with buybacks. Management expects earnings to expand at 8% per year over the next 4 years and that should also lead to stock price appreciation. If all goes as planned for INGR, the stock price could be between $120 and $170 in 2022 on earnings per share of $10.

If you wish to know more, enjoy the video.

Video and content:

00:00 Analysis summary and findings

1:33 Food stock example (LW)

3:27 Ingredion’s business and potential

7:28 Current situation and guidance

8:29 Investment outlook

 

 

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