Though there have been a few exceptions, defensive food stocks haven’t performed so well over the last six months or so, as investors have switched back to industries and stocks offering more leverage to post-pandemic recovery and growth. Mexico’s Gruma (OTC:GPAGF) (OTC:GMKKY) is no exception, as pretty solid financial performance has gone largely unrewarded in recent months.
I was lukewarm on Gruma back in September, mostly just because I thought the market had caught up with the story. I’m a little more bullish now, and I like the company’s combination of somewhat defensive basic food exposure to Latin America, growth opportunities in the U.S. and Europe, and margin leverage. I believe the shares trade at a greater than 15% discount to fair value now, and would still offer a decent mid-to-high single-digit return thereafter.
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