Dealmaker’s Diary: Get Hungry for Gains

Alpesh Patel|August 15, 2024

Here’s a fact…

In good times or bad… we’ve got to eat.

That makes certain food producers safe, defensive plays to feed our portfolio.

Like the one my proprietary GVI system found for me this week.

It’s a leading food producer that has long-lasting brands… brands that we all grew up with.

The stock has low volatility and momentum is ready to push it out of resistance.

Once that happens… the stock could double and hit its highs of 2021.

Get all the details on the company – including its ticker – in my latest video.

Click on the image below to watch it.

 

TRANSCRIPT

Hi, friends. Apologies… I’m not in the office, so you might hear a fan whirring overhead causing the video to look a little bit unusual.

And you might also see a glare on my usual glasses. Forgive the visuals and the audio, what you’re really here for is the substance.

OK. I’m in a very hot climate, so forgive the shine off my forehead as well.

The Stock of the Week is Nomad Foods (NOMD). And let me tell you why it is substance over form.

This is a company with brands that I grew up with, including Bird’s Eye and Findus. It’s a company that has in its portfolio very, very significant and long-lasting brands. A moat, you might say.

It’s a leading frozen food company in Europe. So you’ve got a bit of diversification from what else might be in your portfolio.

It’s a $3 billion company.

Revenue increased for the second quarter, which is good. You want to see that kind of thing.

The company’s also in a pretty safe sector in the sense that we’re going to need food, and frozen food tends to be pretty defensive.

That whole consumer goods sector, but this is a more defensive part of that consumer goods sector. Parts of the sector can be more cyclical to the market environment. But we’ve got to eat in good times and bad.

Earnings and revenue are forecast to grow.

On my Growth-Value-Income (GVI) rating, it’s got an 8. Now, remember, 7, 8, 9, or 10 meets my minimum requirement. The rating is based on the valuation of a company, the growth of a company, and the dividends yields of a company. So we’ve got everything going right for us over that.

For the forecast P/E, you’re paying 9.7 dollars to buy the stock for every future expected dollar in profit. It’s expected to generate.

Cash return on capital invested is 6.4%. Normally, companies in the top quartile by cash return on capital invested (or CROCI), according to Goldman Sachs Wealth Management – I’ve shown the research in other videos around this – are expected to do incredibly well. Now, 6.4% is not quite in the top quartile, but really punching above its weight for what is actually a relatively small company.

The Sortino and Alpha are not ideal. Subscribers to my GVI Investor research service know that I’m looking for companies which are positive on those… and on the Alpha… and in the top quartile of CROCI. This is slightly on the outside looking to get onto the A team, as it were.

Volatility is below 20%, only 13%. I like that.

Now, what am I expecting with the price? The monthly and weekly MACD moving averages are on the up. The stock should continue to see momentum and break that resistance it’s had at just below $20.

It’s found quite a bit of support anyway on the downside, just below $14.

Now, am I saying this is going to double up and go to the previous highs of 2021? No. I think that’s ambitious to say it would happen in 12 months, but over a longer period of time it could well happen.

Certainly, the angle of inclination seems to be to the upside in this for the moment.

The trend is also substantiated by the fact that on a discount cash flow basis, the stock is 66.2% undervalued.

By some estimates, it should be at $55, which is even well above the numbers I told you before and would really blow the doors off.

Anyway, enjoy. I hope you like that. I’m going to go for a dip in the pool. Thank you.