S&P/ASX 300 Index (ASX: XKO) stock Ricegrowers Ltd (ASX: SGLLV) is bucking the broader market malaise today and pushing higher.
Ricegrowers shares closed Friday trading for $15.31. In afternoon trade on Monday, shares are changing hands for $15.32 apiece, up 0.1%.
While that's a modest gain, it's certainly better than the 0.3% loss posted by the ASX 300 at this same time.
Taking a step back, Ricegrowers shares are now up an impressive 78.2% since this time last year. That compares to a one-year gain of 9.1% posted by the benchmark index.
And that's not including the 65 cents a share in fully franked dividends the ASX 300 stock paid out to eligible shareholders over the year. At the current share price, that sees Ricegrowers trading on a fully franked trailing dividend yield of 4.2%.
And according to Lucas Goode, a portfolio manager at Investors Mutual, Ricegrowers is well-placed to keep outperforming in the year ahead (courtesy of The Australian Financial Review).
ASX 300 stock 'one of the best bargains'
"We were the first institutional shareholder in Ricegrowers, trading as SunRice Group," Goode said.
He noted that Ricegrowers "has come onto a few radars in the market after being added to the S&P/ASX 300 Index this week".
Ricegrowers will officially become an ASX 300 stock next Monday, 22 September.
Goode said:
From its origins as the single desk for the Australian rice crop, SunRice has evolved into a global fast-moving consumer goods business that sells into more than 50 countries and generates more than half of its revenue outside Australia.
And there are good reasons the company will now list on the ASX 300.
According to Goode:
Revenue has grown at a 16% compound annual growth rate over the past four years, while dividends have doubled during that period as the company has diversified into categories such as pet food and rice-based snacks.
Goode acknowledged that some investors "may still be turned off" by Ricegrowers' dual-class share structure. This means directors are appointed by growers rather than class B shareholders on the exchange.
But that hasn't dissuaded his fund from investing in the ASX 300 stock.
Goode said:
While we are hopeful that the structure will be eventually collapsed as it would almost certainly drive a re-rating in the share price and provide greater optionality for future inorganic growth, any investor turning their nose up at SunRice purely on that basis is missing out on what we think is one of the ASX's best bargains.
Connecting the dots, Goode concluded, "A valuation of 12 times earnings per share is simply too cheap for a global branded food business in a defensive category led by an A-grade management team."
