BUY ALERT: Maple Leaf (TSX:MFI) Stock Offers Great Value Right Now

Maple Leaf Foods Inc. (TSX:MFI) stock is struggling in the current climate, but it is worth snatching up for the long haul.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Maple Leaf Foods (TSX:MFI) is a Mississauga-based company that produces food products in Canada, the United States, and around the world. Food prices have been one of the key drivers of the soaring inflation rates Canada has experienced over the past year. Today, I want to discuss why this top Canadian stock is worth snatching up, as we look ahead to the fall season. Let’s jump in.

How has this stock performed so far in 2022?

Shares of Maple Leaf have dropped 22% in 2022 as of mid-morning trading on September 19. That has pushed the stock into negative territory in the year-over-year period.

Meat prices have experienced significant price growth in recent months. However, harsh conditions for consumers have made it difficult for companies like Maple Leaf to take full advantage in the same way that grocery retailers have.

Michael McCain, president and chief executive officer of Maple Leaf, said in its recent quarterly report that the current environment was the most “chaotic and unpredictable operating environments” he had experienced in his four decades in the food industry. He lamented that the company has struggled to find adequate labour in the post-pandemic economic climate.

Moreover, Maple Leaf has continued to wrestle with disrupted supply chains and the impact of geopolitical strife in Eastern Europe. Despite these challenges, the company’s leadership is confident it will deliver solid adjusted EBITDA growth over the next five years. EBITDA stands for earnings before interest, taxes, depreciation, and amortization. This measure aims to give a more accurate picture of a company’s profitability.

Maple Leaf still has a future that is worth getting excited about

The company released its second-quarter (Q2) fiscal 2022 results on August 4. Sales increased 3.1% from the previous year to $1.19 billion in Q2 2022. Meanwhile, it posted sales growth of 3.1% to $2.32 billion in the year-to-date period.

Maple Leaf’s Meat Protein Group posted sales of $1.16 billion — up 3.8% from the previous year. Meanwhile, its Plant Protein Group recorded an $18.6 billion restructuring charge. The company has bet big on the plant-based alternatives trend since its acquisition of Lightlife in 2017. It has continued to pour resources into this segment, and it is poised to pay off soon. Maple Leaf projects that the Plant Protein Group will achieve adjusted EBITDA neutrality by the second half of 2023.

Vantage Market Research recently projected that the global plant-based food market would reach $78.5 billion in 2028. That would represent a compound annual growth rate (CAGR) of 11.9% over the forecast period dating back to 2021.

Is Maple Leaf stock worth buying right now?

Shares of Maple Leaf are currently trading in favourable value territory relative to its industry peers. The stock last paid out a quarterly dividend of $0.20 per share. That represents a 3.5% yield. Relative Strength Index (RSI) is a technical indicator that measures the price momentum of a given security. This stock possesses an RSI of 39 at the time of this writing, which means it is nearing technically oversold levels.

Should you invest $1,000 in Aurora Cannabis right now?

Before you buy stock in Aurora Cannabis, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Aurora Cannabis wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $18,391.46!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 35 percentage points since 2013*.

See the Top Stocks * Returns as of 1/7/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

If You Thought Apple and Microsoft Were Big, You Need to Read This.

The steel industry produced the world's first $1 billion company in 1901, and it wasn't until 117 years later that technology giant Apple became the first-ever company to reach a $1 trillion valuation.

But what if I told you artificial intelligence (AI) is about to accelerate the pace of value creation? AI has the potential to produce several trillion-dollar companies in the future, and The Motley Fool is watching one very closely right now.

Don't fumble this potential wealth-building opportunity by navigating it alone. The Motley Fool has a proven track record of picking revolutionary growth stocks early, from Netflix to Amazon, so become a premium member today.

See the 'AI Supercycle' Stock

More on Investing

how to save money
Tech Stocks

The Smartest Growth Stock to Buy Right Away With $5,000

If you want a growth stock, you want a company that has a stable path forward. So, let's look into…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

TFSA: How to Turn the New $7,000 Contribution Into Monthly Passive Income

Wondering how to earn monthly passive income from your recent $7,000 TFSA contribution. Here are two stocks to consider adding…

Read more »

dividends grow over time
Dividend Stocks

These 3 Canadian Stocks Could Triple in 5 Years

These three Canadian stocks are in a prime position for future growth. But some patience may be needed along the…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Metals and Mining Stocks

TFSA $7,000: Where to Invest That TFSA Contribution for Top Income

The TFSA is one of the best ways to invest, and this stock is a strong option to pick.

Read more »

woman analyze data
Dividend Stocks

Got $10,000? Invest in This Dividend Stock for $1,475.68 in Passive Income

If you have a windfall ready to invest, then this is one of the top choices for passive income.

Read more »

Muscles Drawn On Black board
Investing

3 Monster Stocks to Hold for the Next 3 Years

Here are three top monster TSX stocks long-term investors may want to consider right now.

Read more »

Canada day banner background design of flag
Investing

Top Canadian Stocks to Buy Right Now With $2,000

Despite the uncertain outlook, I am bullish on these four Canadian stocks due to their solid underlying businesses.

Read more »

Concept of multiple streams of income
Stocks for Beginners

How to Optimize Your Canadian Investments for the Year Ahead

Here's how you can improve the tax-efficiency of your investment portfolio for 2025.

Read more »