Trade of the Month: Astral vs Rhodes Food Group
Astral vs RFG: bet on the ‘big bird’ in the longer term
Food production is one of the key essential services still operating at near full capacity during they lockdown.It’s not like food producers are in a particularly sweet spot, but there is sufficient activity in maintaining comforting levels of food security during this prolonged crisis to keep the cash flow taps flowing.This month we’d suggest a long-short pairing of two very different food counters — Astral Foods and Rhodes Food Group (RFG).Astral is regarded as the JSE "big bird" for its dominance of the local poultry sector, while Rhodes is a multifaceted operation that spans numerous niches — including juices, jams, canned fruit and pies.IM suspects that Astral’s relentless focus on production efficiencies and stout balance sheet — coupled with CEO Chris Schutte’s street smarts — will stand Astral in good stead over the medium term.Rhodes is an interesting business that was largely bulked up by acquisition after it listed in 2014. But there are clear stress points that could fra...
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