10 Best WallStreetBets Stocks To Buy Right Now

7. Lamb Weston Holdings Inc. (NYSE:LW)

Number of Hedge Funds: 39

Lamb Weston Holdings Inc. (NYSE:LW) is a food processing company, one of the world’s largest producers and processors of frozen french fries, waffle fries, and other frozen potato products. It is known for its high-quality products, innovative offerings, and strong global presence.

It primarily supplies French fries to restaurant chains and food service distributors, with retail sales accounting for less than 20% of its revenue. McDonald’s is a major customer, representing 14% of the company’s sales in fiscal 2024. Revenue in FQ4 2024 was $1.61 billion, recording a 4.90% drop in year-over-year revenue.

Recent performance has been impacted by several factors, including weaker global restaurant traffic, softening demand for frozen potatoes, and increased industry capacity. These challenges are expected to continue through much of fiscal 2025, exacerbated by the company’s capacity expansion efforts. The company experienced a significant decline in its stock price recently when shares fell 55% in July from their 2023. This sharp drop has raised questions about whether the market has overreacted to a company with stable cash flows and a dominant market position.

While capital expenditures have risen significantly, they are expected to decline in the coming years, freeing up substantial cash flow. This could result in a significant increase in free cash flow per share, potentially boosting the stock price, positioning the company to grow as an industry leader.

Diamond Hill Long-Short Fund stated the following regarding Lamb Weston Holdings, Inc. (NYSE:LW) in its Q2 2024 investor letter:

“Still-rising valuations have made identifying attractively valued, long ideas increasingly challenging — though we still found a few in Q2 that we believe the market is overlooking amid its increasingly narrow focus on the mega-cap technology stocks dominating the major indices. We established new long positions in VeriSign, Ulta Beauty, Sysco Corporation and Lamb Weston Holdings, Inc. (NYSE:LW) during the quarter.

Lamb Weston is the US’s leading supplier of frozen French fries. Shares have been pressured amid a slowdown in quick-service restaurant traffic — which gave us a compelling opportunity to capitalize on what we consider a large dislocation in price and intrinsic value.”