Are you looking to find a way to get exposure to an industry leader in the plant-based food product sector? Look no further than the Swedish-Danish company AAK (STO: AAK), which trades on the Stockholm exchange. Stocks on this exchange trade in Swedish Krona, so the current price of 201.70 SEK, is the equivalent of approximately $ 23.00 USD per share. The stock has performed reasonably well over the past 52 weeks, and has followed the trajectory of many companies that are recovering from the COVID-19 pandemic. Recently, AAK hit a new 52-week high, but even still, the performance has actually lagged the benchmark S&P 500 index over the past year.
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The Bullish Case: As the world transitions to a diet that includes less red meats and more plant-based proteins, AAK is positioned well to continue its cultivation and production of oils from sources like palm, coconut, soy beans, palm kemet, shea, and rapeseed. AAK produces for some high demand industries such as pharmaceuticals, plant-based cosmetics, human food products, and animal feed. Costs of harvesting plants such as palm and soy beans are much cheaper and although there are environmental issues that stem from large scale plant farming as well, it is ultimately less damaging to the ecosystem than free-range cattle or other forms of animal harvesting. AAK did see much of its financials take a hit during the COVID-19 pandemic, but a strong finish to the fourth quarter is encouraging as operating profit rose by 8% quarter over quarter to a new all-time high of 607 million SEK. While this lags the recent trend of consistent 10% year-over-year profit growth, we can attribute some of this to COVID-19.
Final Verdict on AAK: Consumer trends are certainly in AAK’s favor, and having quickly expanded across several continents, AAK is well positioned to remain a global leader in the plant-based oil industry. If you can get over the ethical issues of harvesting palm, AAK makes for an excellent and reasonably priced stock to add to a well-diversified portfolio, and even pays a nice dividend on top of that!
