Seeking Alpha: AGT Food And Ingredients May Need Some Time To Digest Its Gains

One of the toughest things to do with a successful stock is to decide when enough is enough and a stock has overshot its mark. AGT Food and Ingredients's (OTCPK:AGXXF)(AGT.TO) shares have risen another third over the past six months, continuing a very healthy run for one of my favorite stocks in the food space. Better still, these gains aren't built on smoke and mirrors - the company has continued to make very real progress with its higher-margin food and ingredient lines and has considerable room to expand from here.

Selling a winner too early can be painful, and I don't think AGT is ridiculously overvalued. Rather, I just don't think it's notably undervalued anymore and that transitions it more to a hold (or maybe a "sell if you need the cash for something cheaper") in my view. I do believe that the company can generate long-term revenue growth in the mid single digits or higher, but I have a hard time seeing how the FCF margins ever go much past the mid single digits; even the specialty food/ingredients business is likely to be a sub-10% FCF margin business over the long term.

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AGT Food And Ingredients May Need Some Time To Digest Its Gains