Analyzing Small Cap Stocks: Grupo Herdez
The TDR Three Key Takeaways regarding Grupo Herdez and Small Cap Stocks:
- Grupo Herdez’s strategic U.S. growth linked to authentic Mexican food demand.
- Grupo Herdez reports a 12% growth rate, outpacing industry averages.
- Grupo Herdez offers a $1.64 dividend, appealing to profit-seeking investors.
Grupo Herdez (OTC: GUZOF; BMV: HERDEZ), operates in the Mexican food industry, has experienced significant growth in recent years, especially in the United States. With a market capitalization of about $1 billion, this small-cap stock has demonstrated substantial growth and financial stability, presenting investment opportunities. The company, based in Mexico City, is the fastest-growing Mexican food company in the U.S. Grupo Herdez has capitalized on the substantial Mexican population in the U.S., estimated at around 37 million people, generating strong demand for authentic Mexican food products.
The broader American market’s increasing preference for Mexican cuisine has further supported Grupo Herdez’s expansion. Approximately 10% of all U.S. restaurants serve Mexican food, with a trend toward higher-end and gourmet options. This shift has opened new opportunities for Grupo Herdez, as premium restaurants seek authentic ingredients to satisfy consumer demand. The company reported revenues of $2.2 billion last year, with a growth rate of 12% year-over-year. This impressive growth, nearly three times the industry average, highlights the company’s effective market strategies and strong brand recognition. The company increased a gross margin of 39.6%, notably higher than the industry average, with Kraft, a benchmark in the food industry, having a gross margin of 33.78%.
Grupo Herdez’s net income is $84 million, reflecting its profitability. The company has a levered free cash flow of $266 million, indicating efficient operations and significant liquidity, crucial for supporting growth initiatives and maintaining financial flexibility. The company currently pays a dividend of 1.64%, reflecting Grupo Herdez’s strategy of reinvesting profits into the business for expansion and long-term growth. The company maintains a solid balance sheet with a credit score of 3.6, signaling a solid financial position and enhancing the company’s credibility with investors and financial institutions. This high credit score is essential for securing favorable terms in future financing and investment opportunities.
Investors can trade Grupo Herdez shares under the ticker symbol GUZOF on the OTC market in the U.S. For institutional investors seeking higher trading volumes, the stock is also available on the Mexican Stock Exchange under the symbol HERDEZ. The company has a long-standing presence in the food industry with a brand portfolio that includes well-known products such as salsas, hot sauces, and Italian pasta, catering to both consumers and restaurants. The company’s high brand loyalty and premium product offerings have been significant drivers of its success.
Grupo Herdez’s strong financial health and strategic position in the expanding ethnic food market make it a compelling choice for investors seeking a small-cap stock with strong growth potential and a proven track record. Want to keep up to date with all of TDR’s research and news, subscribe to our daily Baked In newsletter.
