Cal-Maine Foods Inc (CALM): Strong Profits in Diversified Food Production

Unfortunately, Unilever plc (ADR) (NYSE:UL) has its issues. For one, the company is a trifle pricey at around a 21 earnings multiple. Given the company’s strong overall position, you could pretty much let this go, though. Unilever has also been criticized for purchasing Indonesian palm oil that is contributing to an annual 2% deforestation rate within Indonesia. Because of illegal uses of certain land to grow the palms and fire to clear the land, Indonesia is the world’s third-largest producer of greenhouse gases — and Unilever has supported this practice by purchasing massive amounts of palm oil.

To the company’s credit, for each ton of palm oil it purchases it also purchases a certificate from GreenPalm that rewards sustainable palm-oil producers. It still sounds a bit shady, and this could still blow up in the company’s face from a PR standpoint. If you’re confident that Unilever plc (ADR) (NYSE:UL) is cleaning up its act, this could be a decent contrarian investment — though waiting for a dip in the price would be a good idea.

The Foolish bottom line

There is great value in the more profitable companies of the major diversified-food industry. You just have to be aware that even a good company may sometimes do bad things. If you’re okay with this and possibly a higher earnings multiple than the S&P 500, you can find some good companies for less than stellar deals.

Chris Hodge has no position in any stocks mentioned. The Motley Fool recommends Unilever.

The article Strong Profits in Diversified Food Production originally appeared on Fool.com.

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