Food: the good, the bad and the unappetising

Good Morning Voornaam,

Food. We all need it. Some eat to live and others live to eat, like me.
This doesn't mean that all food businesses are great investments. In reality, they vary drastically based on where they play in the value chain, the global vs. local revenue mix, the level of differentiation in the products and the extent of inflationary pressures. A bread manufacturer has a different set of problems to a canned fruit exporter.
Yesterday, we saw results come out from Tiger Brands and RFG (Rhodes Food Group), both of which are interesting businesses that are facing inflationary and supply chain pressures at the moment. I chose to write a feature article on Tiger and I covered RFG in some detail in Ghost Bites.
We also saw an update from Bidcorp, one of the few genuinely global groups listed on the JSE. This food service business supplies restaurants, hotels and catering businesses across several continents. The pandemic wasn't a happy time for that industry but things are much better now. There's a feature article on Bidcorp to give you all the details.
In Magic Markets Premium, we decided to research Walmart this week. The global retail giant had a shocker of a quarter, with the share price tanking as a result. I must say, I was very surprised by some of the things I saw in the result, as I haven't researched Walmart in detail before. The group has an impeccable dividend track record and is prepared to defend it at all costs, including through effectively raising debt to avoid having to cut dividends. To learn more about Walmart and many other global stocks that are in our research library, you can subscribe to Magic Markets Premium for R99/month.
Wichard Cilliers (Head of Market Risk at TreasuryONE) has been getting us excited for the FOMC minutes from the Fed for the past few days. This is the statement released by the US central bank that gives a sense of where interest rates might be heading. Here's his comment on the minutes:
"The rand traded firmer yesterday morning, with the local unit breaching the R15.60 mark briefly and reversing most of those gains. The FOMC minutes were released and just reiterated that the Fed is looking to hike by 50bps at its June and July meetings. The Fed is also still worried about the hardship that higher inflation is bringing to the American people. There wasn't much else to take away, as the Fed is still looking to hike interest rates to neutral. US treasury yields barely moved on the release of the minutes, so the release didn't impact markets as much as anticipated."
I had to research the "neutral rate of interest" after reading this and I found that this is the rate t hat supports the economy at full employment while keeping inflation constant. You could think of it as the equilibrium rate. Nobody knows exactly what that rate is, of course! It's all about forecasts and educated guesses. If you run a business that is impacted by forex and interest rates, then take some of the guesswork out by speaking to the team at TreasuryONE about their service offerings.
Today at 12pm, the management team of Calgro M3 will be presenting on Unlock the Stock. This free online event allows you to engage directly with the management team. Instead of just wasting your lunch break at work, give yourself a wonderful opportunity to learn. You need to sign up at this link to attend.
Have a lovely day!