The TSX is showing a modest gain of about 2.5 per cent this year, and many of the key sectors aren’t even doing that well. Energy, information technology and industrials are all in negative territory for 2025, while financials are only slightly above break-even.
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 7.2 per cent year-to-date, as of May 9.
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. (DOL-T), which is up 18.4 per cent year-to-date, Loblaw Companies Ltd. (L-T, up 15.3 per cent), Empire Co. Ltd. (EMP.A-T, up 15.3 per cent), Metro Inc. (MRU-T, up 15.5 per cent) and the North-West Co. Inc. (NWC-T, up 10.6 per cent).
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 we’re adding Maple Leaf Foods to our recommended list. Here are the details.
Maple Leaf Foods Inc.
Closed Friday at $26.72.
Ticker: MFI-T
Background: Maple Leaf Foods 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, Ont. MLF has been in business for more than 100 years and claims to be the world’s first major carbon-neutral food company.
Performance: The five-year 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.
Recent financials: 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 per cent. Sales in the prepared foods, poultry and pork operating units increased by 7.1 per cent, 6 per cent and 12 per cent respectively.
Earnings were $50-million (40 cents per basic share), slightly below last year’s $52-million (42 cents per share). Adjusted earnings per share for the first quarter of 2025 were 43 cents, compared with four cents last year.
Why we like it: 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.
Dividend: The shares pay a quarterly dividend of $0.24 (96 cents a year) to yield 3.6 per cent at the current price.
Spin-off: Last July, Maple Leaf announced the planned spin-off of its pork operations as a standalone public company to be called Canada Packers Inc. Work on the plan is well under way, 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.
Outlook: The company expects revenue growth this year to be in the mid-single-digit range. It also forecasts improved adjusted EBITDA growth over 2024.
Risks: The stock 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 months adjusted EBITDA is 2.6 times, compared with 2.7 times at the end of the fourth quarter of 2024 and 3.7 times 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.
Conclusion: The company is a major Canadian food processor, which is a sweet spot to be in at this time. The shares are up 30 per cent year-to-date.
Action now: The stock is a buy for aggressive investors.
Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.