Up 41% in a year, is it too late to buy Graincorp shares in 2022?

Graincorp Ltd (ASX: GNC) shares have been among some of the strongest performers on the S&P/ASX 200 Index (ASX: XJO) over the past year.

Since 23 August 2021, Graincorp shares have gained 41%, while the S&P/ASX 200 Index (ASX: XJO) is down 6% over the 12 months.

And today marks another day of outperformance for the integrated grain and edible oils business, with shares up 0.7% to $8.61, as the ASX tumbles 0.86%.

Even with the big share price gains, Graincorp’s trailing dividend yield remains at a healthy 2.6%, fully franked.

But after such a strong run, is it too late to buy Graincorp shares in 2022?

Food prices join energy prices in shooting higher

It’s not just energy prices that have gone through the roof this year. Grains and most food prices have shot higher as well.

Part of those price hikes are linked to higher energy costs, as most farming requires a fair bit of energy input, even before the final, processed products need to be transported to market.

Russia’s invasion of Ukraine also contributed to fast-rising prices. While Ukraine is again exporting grain, the levels are far below the five to six million tonnes the nation was exporting before the war.

Higher grain prices and people’s need to keep eating should continue to offer tailwinds for Graincorp shares.

Saxo Bank’s country head of direct sales David Harvie is bullish on the outlook for the company.

Speaking to my Fool colleague Mitchell Lawler in Brisbane last week, Harvie said that the ASX agriculture share is one both he and Saxo like the look of.

“I’ll always start with the fundamentals,” he said. “And that’s why from an investment standpoint, I’d probably pick something like a Graincorp. That thematic of food requirement and surety of production over time.”

Graincorp shares lifted by upgraded guidance

Earlier this month, Graincorp shares got a big lift after the company upgraded its earnings guidance for the period ending 30 September.

The company’s new forecast envisions earnings before interest, taxes, depreciation, and amortisation (EBITDA) in the range of $680 million-$730 million, up from previous guidance of $590 million-$670 million.

Graincorp also increased its net profits after tax (NPAT) guidance from $365 million-$400 million, up from the previous guidance of $310 million-$370 million.

The post Up 41% in a year, is it too late to buy Graincorp shares in 2022? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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