Weekly Issue #2
Last week, Canadian Tire was a great company at too high a price — a “wait.” This week is the opposite: a genuinely cheap stock that’s also genuinely good. It’s a company you’ve probably never thought about — which is exactly where value tends to hide.
Ingredion (NYSE: INGR) — ~$107
Ingredion makes the corn-based sweeteners, starches, and ingredients inside food you eat every day. Deeply unglamorous — nobody’s tweeting about it. So let’s do the boring, profitable thing and run the checks.
| The check | Reading | Verdict |
|---|---|---|
| Cheap on earnings? (P/E) | 11.5 | ✓ Cheap |
| Cheap on assets? (P/B) | 1.49× | ✓ Just under the line |
| Financially sturdy? (current ratio) | 2.8× | ✓ Strong |
| Distress risk (Altman / Piotroski) | 3.8 / 8-of-9 | ✓ Strong |
| Deep bargain? (net-net) | No | – |
| Below fair value? (Graham #) | $135 vs $107 | ✓ ~21% under |
Bottom line: cheap and high-quality — a real margin of safety. This one’s a buy.
1. Price vs earnings (P/E): 11.5 — well under Graham’s ceiling of 15 — about an 8.7% earnings yield. You’re paying a fair price for its profits, not a premium.
2. Price vs book (P/B): 1.5× — right on Graham’s 1.5 line, so you’re not overpaying for what the company actually owns.
3. Can it pay its bills? Easily. — current assets are 2.8× current liabilities, its long-term debt sits below its net current assets (Graham’s own debt test), and total debt is only about 0.4× book equity. The app scores its financial health a perfect 5 of 5. This is a sturdy business.
4. Distress risk — low, and improving. — Altman Z of 3.8 puts it well clear of trouble, and its Piotroski score is 8 of 9 — that high mark means its fundamentals are getting stronger, not drifting. Cheap and improving is a rare combination.
5. A deep Graham bargain (net-net)? No — — and you’d never expect one from a profitable company this size. Net-nets hide among the market’s wreckage, not among steady earners.
6. One number — the Graham Number: — Graham’s formula (roughly, the square root of 22.5 × earnings × book value) puts fair value near $135. At $107, you’re buying it about 21% below that. And that’s the most conservative read: blend in the app’s other three methods and average fair value lands near $180 — a margin of safety of roughly 41%. I anchor to the cautious number; the upside is the bonus.
One flag worth noting — skin in the game
Warren Buffett likes to see the people who run a company backing it with their own money. At Ingredion, the honest read is lukewarm: the recent insider filings are small sales, not buys. The latest is a director trimming about 1,662 shares at ~$102 in early August, plus an officer selling a small stake earlier in the year — minor, routine sales, not a stampede for the exits.
Two things to sit with. First, that August sale happened at ~$102 — right around today’s price, not at some rich peak — so it’s hard to read as “insiders think it’s expensive.” Second, and more telling: nobody is buying. When the people who know the business best aren’t stepping up to buy their own dip, it’s no reason to panic — the sales are tiny — but it’s not the ringing endorsement you’d love to see either. Reason enough to size a position sensibly rather than bet the farm.
The price
Here’s the nice part: you’re basically already there. At ~$107, it’s about 21% below its ~$135 Graham Number — and closer to 41% below the ~$180 blended fair value — with the quality to back it up. You don’t have to wait for a crash: the app already flags it a “buy,” clearing its one-third-margin zone (under about $121). If you want an even bigger cushion, under $100 (near its 52-week low around $94) would be gravy.
A note on selling (optional): a traditional value investor simply holds while a stock trades below what it’s worth — so somewhere up in that ~$135–$180 fair-value range is a sensible “ceiling” to keep in mind. But if you like the discipline, some investors sell enough as a stock recovers toward fair value to pull their original stake back out, then let the rest ride on “house money.” Both are valid — just know your own style before you buy.
Which account?
Ingredion pays a ~3% US dividend, and that’s where a Canadian detail matters. Hold a US dividend payer in a TFSA and the IRS quietly skims 15% off every dividend — gone for good. Hold it in your RRSP and that withholding tax is waived by treaty. So a steady US dividend stock like this one has a natural home: the RRSP.
The point: the exciting stocks everyone’s talking about are usually priced for perfection. The boring, profitable, unglamorous ones are where value quietly hides — and the way to use one is exactly what we just did: run the checks, note the flags (yes, the insider selling), and decide with your eyes open.
Free — including the live insider-trading trend — then run any US or Canadian stock you like.