Lasco Manufacturing and GraceKennedy (GK) Group’s diversified portfolios have been paying off, according to The Analysts of Taking Stock with Kalilah Reynolds.

Both companies recently reported increases in their net profits, despite the COVID-19 pandemic.

Lasco Manufacturing’s net profits increased to $403 million, a 43 percent increase for the quarter ending December 31, 2021.

A look at Las-M

Wealth Manager at Ideal Securities Brokers Limited, Orick Angus, said that the company has been working on diversifying their product lines over the past few years.

“The revenue is not solely dependent on any one particular product. So, you find that the revenue margins are so diverse that the company has remained consistent over the last five to eight years,” he said.

Angus also noted that the company is in good standing in regards to inventory and cash.

“They’re in a strong cash position right now. The company has around $20 billion worth of cash on the account,” he noted, adding that it also has significant inventory towards mitigating supply chain (disruptions).

To that point, Angus noted that the company will have to increase prices if supply chain issues, caused by the global pandemic, persist.

This is something that Lasco Manufacturing’s Managing Director, James Rawle, has already confirmed. 

“The evolution of the COVID-19 pandemic in terms of waves, variant, vaccination take up and potential containment measures that may have to be taken will undoubtedly continue to pose challenges for the business environment for the medium term at least,” he said in an interview with Loop News.

“Material price inflation increased logistics costs, and supply chain disruptions will continue to add complexity. Margins will therefore continue to be under pressure, and price increases will become necessary,” he added.

Despite this, Angus said that over the next 18 month, shareholders could see up to a 99.5 percent uptick in the stock price, bringing it to about $9.14.

Julian on GK

Meanwhile, Assistant Manager of Private Equity at PROVEN Wealth, Julian Morrison, said that GK’s diversified portfolio has also helped the company remain profitable.

The group recorded a 26 percent increase in net profits for the nine months ending September 30, 2021.

It operates under two main arms, GK Food Services and GK Financial Services. 

Morrison noted that each branch owns several other companies which contributes to its overall success.

For instance, among other things, GK Foods owns 35 percent of Catherine’s Peak and 50 percent of Dairy Industries which manufactures Tastee Cheese, Really Great Yogurt and Anchor Butter. Meanwhile, GK Financial owns 100 percent of First Global Bank and GK Money Services which operates FX Trader, Western Union and Bill Express.

“They have a good mix of revenue lines. Their business lines are doing fairly well,” Morrison said.

“GK Foods has the lion’s share of the revenue, about 80 percent of the adjusted revenues for the group. However, GK Financial Group together provides a mix,” he said.

GK Financial Group has three branches: money services, insurance and banking and investments. 

Morrison noted that the services, together, contribute to roughly one-fifth of the group’s total revenues.

He said GK has become a household name, noting that research shows that most households have at least one GK product. The company also boosted its exports by almost 31 percent between January and October 2021, which has been a driver for its continued growth. 

He also noted that the company would have benefited from the work from home agreements instituted by many companies in light of the COVID-19 pandemic. 

Morrison said that over the next 12 months investors may see GK’s share raise to roughly $116 from its current $102.

The group’s full year performance results are expected to be released soon. 

–END–