The market volatility in recent weeks has put pressure on some stocks, forcing some already cheap shares even lower. I’ve had one FTSE 250 stock on my watchlist since the start of the year. After hitting the lowest level in over a decade at the end of January, I believe it’s a good time to buy. But does the outlook stack up?
Recent issues
I’m talking about Hilton Food Group (LSE:HFG). The stock is down 40% over the past year, and a late January trading update revealed that profits could fall 10%–20% in 2026. In terms of reasoning, disruptions to the Foppen business, inflationary pressures, and overall weak demand were cited.
The Foppen issue is arguably the biggest headache for investors. The brand, which specialises in seafood, has been hit by US regulatory restrictions, showing how operations for a large FTSE 250 group company can be impacted by something rather unusual. At the moment, the US has restricted salmon shipments from Foppen’s facility in Greece. This has forced the company to temporarily shift production to the Netherlands.
The issues and profit warnings have pushed the stock lower and lower, to what some believe is now at an overly cheap price. Given where the stock trades relative to the past decade, it’s clear why it could be called a once-in-a-decade opportunity.
Reasons for optimism
At a basic level, the management team is aware of the problems and is working to resolve them. The company is reviewing its entire portfolio and considering potential actions to cut costs or restructure. I wouldn’t rule out a sale of Foppen in the near future. This is key because at least senior leaders are conscious that change is needed.
The full-year results are due at the end of the month. This should detail the changes that will be made. Given that the trading update from January got the bad news out of the way, I struggle to see how the results could cause a significant negative reaction.
Outside of this, the company is doing well with expansion opportunities. This includes Canada with the Walmart supply deal and Saudi Arabia. This could act to help diversify risk away from other areas of the business.
Finally, the problems with Foppen can be solved. If progress with the US authorities comes later this year, it could spark a large rally. If it can’t be resolved, selling the entity and moving on is another route. Either way, I don’t see this as an issue that’ll drag on for years. So with a long-term investment horizon, the share price should be able to enjoy a brighter future.
With a price-to-earnings ratio of 8.2, it’s cheap, as I use a benchmark figure of 10 for fair value. Given where the stock currently trades, I do believe it’s a rare opportunity, and so I’m seriously thinking about adding it to my portfolio.
