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Maple Leaf Foods brings home the bacon

Published on 06-23-2025

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Attractive yield, but volatile price history

 

The TSX is showing a modest gain of about 2.5% this year and some key sectors struggling. Energy and industrials are in negative territory for 2025, while information technology is up only 2% year to date.

But a few sectors are outperforming. Gold is at the top of that list, which is not surprising given that the precious metal has hit several new all-time highs in recent weeks. Other mining stocks are also doing well, as are utilities, which are seen as being recession-resistant.

Then there is the consumer staples group. These are the companies that either make the things we eat and drink or sell those products to us. The sector is ahead 10.1% year-to-date, as of June 13.

Many of the top-performing companies in the S&P/TSX Consumer Staples Index are recommendations of my Internet Wealth Builder newsletter. They include Dollarama Inc. (TSX: DOL), which is up 18.4% year to date, Loblaw Companies Ltd. (TSX: L, +18%), Empire Co. (TSX: EMP.A, +18), Metro Inc. (TSX: MRU, +15.7%).

All these companies are retailers. We don’t have much exposure to the actual food producers. With consumers seeking to “Buy Canadian,” that needs to be remedied, so I’m adding Maple Leaf Foods to our IWB recommended list. Here are the details.

Maple Leaf Foods brings home the bacon

Maple Leaf Foods Inc. (TSX: MFI) is a leading food producer whose brands include Maple Leaf, Schneiders, Mina, Greenfield Natural Meat, Lightlife, and Field Roast. The company produces prepared meats, ready-to-cook and ready-to-serve meals, snack kits, value-added fresh pork and poultry, and plant protein products. MLF employs approximately 13,500 people and does business primarily in Canada, the U.S., and Asia. The company is headquartered in Mississauga, Ontario. MLF has been in business for over 100 years and claims to be the world’s first major carbon neutral food company.

The five-year stock performance chart looks like a profile of the Rocky Mountains – many peaks followed by deep valleys. So far this year, the trend has been up, and the shares are trading near their 52-week high.

On May 8, the company reported first-quarter 2025 results. Sales were $1.241 billion, compared with $1.147 billion for the same period last year, an increase of 8.2%. Sales in the Prepared Foods, Poultry, and Pork operating units increased by 7.1%, 6%, and 12%, respectively. Earnings were $50 million ($0.40 per basic share), slightly below last year’s $52 million ($0.42 per share). Adjusted earnings per share for the first quarter of 2025 were $0.43 compared with $0.04 last year. The shares pay a quarterly dividend of $0.24 ($0.96 a year) to yield 3.6% at the current price.

The company expects revenue growth this year to be in the mid-single-digit range. It also forecasts improved adjusted EBITDA growth over 2024.

Last July, Maple Leaf announced the planned spinoff of its Pork operations as a standalone public company to be called Canada Packers Inc. Work on the plan is well underway, and the company has scheduled a meeting of shareholders on June 11 to approve the transaction. Closing is expected in the second half of this year.

Opportunity with risks

Keep in mind that MLF has a volatile history, due in part to the company’s heavy debt load, which was $1.554 billion at the end of the first quarter. However, that was down from $1.723 billion at the same time in 2024. Net debt to trailing 12-month adjusted EBITDA is 2.6x, compared with 2.7x at the end of the fourth quarter of 2024 and 3.7x at the same time a year ago.

Other risks to consider include consumer sentiment, which can change quickly, and exports, which may be affected by the trade wars.

The company is a major Canadian food processor, which is a sweet spot to be in at this time. The shares are up 30% year-to-date. The “buy Canadian” sentiment that’s sweeping the country is almost certain to benefit Maple Leaf as consumers seek made-in-Canada products. As a bonus, the stock offers an attractive yield.

Because of its volatility, the stock would be suitable for aggressive investors. Check with your advisor before investing to ensure it aligns with your financial objectives and risk-tolerance level.

Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.

Follow Gordon Pape on X at X.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney.

For more information and details on how to subscribe to Gordon’s newsletters, go to www.buildingwealth.ca/subscribe.

Notes and Disclaimer

Content © 2025 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.

Image: iStock.com/kabVisio

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