Long-term value investors understand that truly profitable trends can take time to build up. Stock market sectors wax and wane with the economy and flow along the curvature of the business cycle, but others don't necessarily obey the same rules.
There's an old saying by Mark Twain, “buy land – it's the one thing they’re not making any more of.” Value investors can take it one step further, though. Arable land is limited, and the global population is growing. That makes food production a critical industry that will continue to be relevant regardless of economic direction.
Low oil prices translate into higher consumer spending which benefits food production companies as well. As a defensive non-cyclical industry, demand stays relatively constant regardless of how the economy is performing.
A missed quarter is often an opportunity for value investors who know how look to the future rather than the short term. A temporary stock hit can mean getting a discount on a company that could turn around and post out-sized profits down the road.
For a food production company, weakness can come from a number of sources such as higher livestock costs, grain costs or import costs. However, one fairly steady constant is the demand for food itself. Rather than being subject to supply and demand curves or the whims of the business economic cycle, a food producer will always have a solid customer base that's always growing as the global population rises. Regardless of the state of the economy, food will always be in demand making it a solid investment choice over the long run. Continue reading "A Consumer Goods Stock That Feeds Any Investors Appetite"→
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