Inflation, GLP-1s and weed have left a lot of wreckage in the supermarket aisle. I’ve been intrigued by a few names, but just about everything cheap has too much debt. Diageo $DEO, with its new CEO, seems like an interesting turnaround. And when was the last time Pepsi $PEP had a dividend yield above 4%? I even spent some time looking at the Turkish biscuit-maker Ulker $UELKY. You can find Ulker in the bargain bin. But if you think we have a problem with ingredient inflation, you ought to see what the working capital looks like for a Turkish confectioner.
I had a chance to dig around some of our own ingredient makers. Ingredion $INGR was once called Corn Products International but changed its name to reflect the company’s growing participation in more dynamic sectors like pea protein and stevia. Unfortunately, its legacy assets are still a drag. Sadly, the Argo corn starch business has been an actual tragedy due to a massive fire at a Chicago complex. Douglas Ott has written a nice summary of the business, so I won’t repeat his work.
Ingredion, with a market cap of $6.6 billion, decided it better pull off a Shawshank and get busy livin’. They went out and made a $5 billion offer for British ingredient maker Tate & Lyle. I worked up some numbers to see if there was much merit to the deal. I’m not inspired.
Presented below is a summary valuation where I combined cash flows for the two businesses, added projected synergies, and helped get the Argo plant back on line. I employed a weighted average cost of capital of 9.13% for the combined entity. That might be a bit high but I’m not exactly getting good vibes from the Treasury or Gilt markets these days. In my estimation, Ingredion is trading about 20% above it’s intrinsic value. It’s a pass for me. This is a big deal for Ingredion, and big transatlantic food deals are seldom winners.
I wonder how that Yoplait acquisition is working out for Lactalis?
Music interlude: Joe Stummer.
I’m all lost in the supermarket
I can no longer shop happily
I came in here for that special offer
A guaranteed personality
There’s a good topic for a poll. What are the best songs that start with the chorus? Paradise City by GnR would probably be on that list.
Let’s switch channels to Africa. If demography is destiny, then investing in African companies makes sense. I own MTN Telecom $MTNOY. The $21.6 billion market cap South African mobile network operator recently surpassed 300 million subscribers. MTN is the largest mobile operator in Nigeria, South Africa and Ghana. Shares trade at 17 times trailing earnings. I’m also intrigued by Reunert, another Johannesburg listing. It sounds like Eskom has finally got the power working in South Africa, so that could be good for their electrical business. Reunert also has a European defense business that is growing nicely.
I wanted to see if there were any ways to invest alongside Africa’s wealthiest individual, Aliko Dangote. Turns out the answer is yes. Dangote opened Africa’s largest oil refinery in 2024. You can’t participate in what will likely become one of Africa’s biggest producers of cash. At least not yet. However, shares in his cement and sugar refining companies are traded in Lagos. In fact, Mr. Dangote is aiming to list Dangote Cement PLC in London soon. Dangote Cement trades with a market cap of 17.3 trilion naira, or $12.66 billion. Revenues are on track to exceed $3.68 billion in 2026. Revenues are growing at 20% per year in a country with 15% inflation.
But Dangote Cement seems too good to be true. The group has consistently posted operating margins in excess of 30%. The margin was 42% for the first six months of 2026. Now if that seems a little high, well, that’s because it is. CRH & Holcim are the largest publicly traded cement companies in the world, and their margins are in the high teens. Cemex barely hits double digits. Anhui Conch, the Chinese giant has 13% operating margins.
I don’t have a Scooby as to why Dangote is so profitable. Monopoly pricing seems like one possibility, I suppose. But yeah, I’m just leaving Dangote Cement alone for now.
Until next time.
DISCLAIMER
The information provided in this article is based on the opinions of the author after reviewing publicly available press reports and SEC filings. The author makes no representations or warranties as to accuracy of the content provided. This is not investment advice. You should perform your own due diligence before making any investments.