AGT Food And Ingredients Still Catching Up

Toiling in relative obscurity hasn't really hurt Canada's AGT Food and Ingredients (OTCPK:AGXXF) (AGT.TO), as this leading processor of lentils and other pulses has seen its shares climb more than 40% over the past year and 150% over the past three years. I've been a fan of this company for some time now given its efforts to add capacity in higher-margin businesses like good ingredient production, but I thought the valuation was getting a little steep back in April, and the shares are more or less flat since that last update (though with a 15% dive in the interim).

At this point, I'm still ambivalent about these shares. I like AGT's efforts to build out its higher-margin ingredients lines, and I think a strong Canadian pulse crop bodes well for next year, but this company has never been good about generating free cash flow and management's periodic comments about the business lead me to wonder if there's really a solid long-term plan in place. I think a price in the high 30s (in Canadian dollars; the Canadian shares are much more liquid and I'd recommend investors buy these if possible) is appropriate today and I'd need another dive into the low C$30s to really get excited about buying shares.

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AGT Food And Ingredients Still Catching Up