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Summary
- As businesses return to normalcy, growth is expected in food and beverages sector.
- The present market conditions can be used as an entry point by the investors.
The food and beverage industry is the second largest manufacturing industry in Canada and contributes to the country's economy in a significant way. This industry accounts for 17 per cent of total manufacturing and 4 per cent to the national GDP.
In the last 12 months, the food sector was affected badly due to high volatility in the markets caused by the COVID-19 situation. However, as vaccines are get rolled out and businesses return to normalcy, this sector is expected to grow. This can further lead to a boost the country's economy.
In this article, we'll talk about the top two food stocks you might lookout for this year:
MTY Food Group Inc. (TSX: MTY)
Headquartered in Montreal, this company is a franchisor and operates several casual dining and quick service restaurants, which operate under more than 70 brand names. It has a presence in Canada and the US and generates highest revenue from Canada.
It has a market cap of C$ 1.4 billion and holds a P/B ratio of 2.4. The stock prices grew up by 145 per cent in a year and 6 per cent year-to-date (YTD).
The company’s cash flows from operating activities reached C$ 44.8 million fourth quarter 2020, up by 18 per cent in the previous quarter. Adjusted EBITDA decreased 18 per cent year-over-year (YoY) to C$ 35.2 million.
However, due to the COVID-19 restrictions (second wave), the system sales went down to C$ 891.4 million, down by 13 per cent YoY.
On the other hand, digital sales went up and reached C$ 193 million in Q4 2020, up by 133 per cent in Q4 2019.
SunOpta Inc. (TSX: SOY)
This is a Canadian company that focuses on healthy food and beverages products that are either plant or fruit based, popularly knowns a meat-substitutes. SunOpta Inc. is based out of Ontario, Canada and it had a good presence in the US, from where majority of revenue comes.
The stock for this company is doing well, advancing by 657 per cent in a year and almost 28 per cent YTD. SunOpta has a market cap of C$ 1.9 billion and it offers a 38.5 per cent return on equity.
Its revenues increased by 10.4 per cent in the fourth quarter (ended January 2, 2021) to reach US$ 205.6 million in Q4 2020.
The gross profit for the company was US$ 31 million in Q4 2020, up by 43 per cent in Q4 2019.
The company will be added to the S&P/TSX Composite Index prior from Monday, March 22.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view.
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