not vested
Stocks to Buy for the Next Decade: Lamb Weston (LW)
Investors might not be familiar with Lamb Weston Holdings Inc (NYSE:LW). The company was spun off by Conagra Brands Inc (NYSE:CAG) almost a year ago, and LW stock has gained nicely since then.
However, most investors know one of the company’s key products: the McDonald’s Corporation (NYSE:MCD) French fry. McDonald’s accounts for 11% of the company’s sales, and other fast-food chains provide a substantial amount of sales as well.
Lamb Weston’s frozen potato products also are sold to smaller chains, independent restaurants, and overseas customers, along with a smaller presence at retail.
Growth has been steady, margins continue to expand, and those international customers offer growth opportunities as French fry demand increases beyond the U.S.
LW stock isn’t necessarily cheap, but relative to other food producers it’s not terribly expensive. But with limited exposure to pricing pressure and deflation in supermarkets, the stock should trade at a premium.
A 1.5% dividend adds income, and a sub-$50 price still looks cheap. As long as consumers eat French fries, LW stock should continue to rise. And one imagines that French fry demand isn’t going to decline any time soon, whether at McDonald’s or anywhere else.
Source: Investor Place