Food is paramount to humanity. It’s been safe for us in Europe for a while but the future is as uncertain as climate change is a fact. For this reason, agriculture will be center stage soon, if not already today. For this reason we picked Origin from the Ireland ISEQ Top 10 list August 2022.
Origin Enterprises is an agriculture services company. They provide specialist agronomy advice, crop inputs and digital agricultural solutions to farmers, growers, and landscape professionals. Its segments include Ireland and the United Kingdom, Continental Europe, and Latin America (Brazil). The Continental Europe segment includes operations in Poland, Romania, and Ukraine.
We didn’t pick Glanbia because it is in the business of the less essential performance foods for athletics and we also decided against companies on the Multimedia investment theme Top 10, such as RTL, Ipsos and Criteo. They are interesting because of good Obermatt ranks but they didn’t make the buy decision because we like the more essential nature of Origin better.
PRO: The following three points speak for a buy:
- Origin has a high dividend yield with an Obermatt Dividend Yield Rank of 94 (up from 1), representing a dividend yield absolute value of 5.0%, high for this industry. No wonder, it is better than 94% of alternative investments in this field.
- While Origin had sluggish growth for a couple of years (Growth Rank 32 in 2019, 1 in 2020 and 38 in 2021), it is now back in the above average field with a rank of 55 (better than 55% of its competitors).
- The financing practices of Origin are conservative which means that they are less affected by interest rate increases. Their Liquidity is better than 61% of their peers (rank of 61) and their leverage is better than 53% of the peers.
CONTRA: The following three points argue against it:
- Origin has been a high value company for several years. They were cheaper than 98% of their peers in 2019 and 77% of their peers in 2020. In 2020, they were cheaper than almost all of their peers.
- It’s a relatively small company
- The company has active stock buyback programs. This could be seen as a lack of attractive operating investment opportunities. Other investors see this as a benefit because they expect higher returns in the future.
The PRO points clearly outweigh the cons. For this reason, we recommend buying the stock for the Obermatt Wikifolio Europe Value.