The Freedom Foods Group Limited (ASX: FNP) share price surged 3.3% higher on the ASX yesterday despite its shares trading ex-dividend.
What dividend was Freedom paying?
Freedom Foods paid out a 2.25 cents per share (cps) dividend for its investors, franked to 50%.
This represents a 1.1% p.a. yield for the company which is certainly at the lower end of the S&P/ASX200 Index (ASX: XJO) albeit a bonus for a stock that is trading at a P/E multiple of 82.4x earnings.
Why did Freedom's share price surge higher?
With no new company news out on the ASX yesterday (or even in the last week), it's difficult to pinpoint the driver of the latest share price move.
On 25 March 2019, the company put out a notice rejecting media speculation that it was potentially involved in an acquisition of Lion Dairy and Drinks Portfolio which is subject to a sale process by Kirin.
The company's share price has been hammered 29% lower in the last 6 months as it works to improve profitability and streamline its operations with a focus on core business segments going forward.
Foolish takeaway
My best guess for yesterday's share price bounce is investors looking to buy into Freedom Foods on the cheap given the recent negative momentum we've seen in the stock.
As far as its peers in the S&P/ASX200 Consumer Staples Index (ASX: XSJ), Freedom hasn't been the worst performer by a long stretch this year.
The sector has seen the share prices of Costa Group Holdings Ltd (ASX: CGC) and Blackmores Ltd (ASX: BKL) fall by 27% and 25.5%, respectively in 2019 as the index has been the worst performing of the 11 major ASX200 indices.
Overall, I think Consumer Staples will see a rebound in the next 12-18 months as headwinds for global economic growth continue to build and investors turn towards non-cyclical companies for further portfolio growth and stability.
For the moment, however, I would be steering clear of Freedom Foods and its underperforming peers and checking out this buy-rated stock that could be set to take a new-age $22 billion industry by storm.
