This potato company beat Wall Street’s earnings forecasts by $0.08 last quarter.
Lamb Weston Holdings, Inc. (LW)
From DRIP Investor
Lamb Weston (LW) is one of the world’s leading suppliers of frozen potato products. The company has been publicly traded only since the end of 2016, when the firm was spun off from Conagra. The firm has put up nice growth numbers since becoming an independent concern.
Frozen potato demand is strong—the company estimates that 80 million portions of fries are sold everyday worldwide. Lamb is the No. 1 player in frozen potatoes in the U.S. and No. 2 globally. Retail represents 17% of sales, with foodservice accounting for 32% and global 51%. The firm sells its products in more than 100 countries.
The stock is trading at a 17% discount to its 52-week high of roughly $84 per share. It’s difficult to find food stocks showing decent growth, which is why Lamb represents such an attractive play in the food space. Revenues were up 11% in the latest quarter, and the firm expects revenue growth for fiscal 2019 to be mid-to-high single digits.
The stock is not cheap at 23 times expected 2019 earnings of $3.06. Nevertheless, Lamb Weston offers an under-the-radar play in a sector where growth is scarce.
Lamb Weston’s direct-purchase plan has an initial minimum investment of $250. The firm will waive the minimum if an investor agrees to automatic monthly investment of at least $50. There is a $15 one-time enrollment fee. Purchase fees are $5 ($2 if made with automatic monthly investment) plus $0.06 per share. Selling fees are $15 for a batch sale and $25 for a market order sell plus $0.12 per share. The plan administrator is Equiniti. For enrollment information call (888) 291-3713 or visit www.shareowneronline.com.
Charles B. Carlson, CFA, DRIP Investor, www.dripinvestor.com, 800-233-5922, March 2019