Givaudan: The highest quality and most resilient ingredient compounder has a compelling valuation

Givaudan is a very high quality compounder and low risk way to play this attractive niche with upside on a new long term plan

Welcome to the 25th investment case and 21st resilience idea on Crack the Market (and the most comprehensive Givaudan investment case you will find online)! Join me as I dissect an ingredient giant, a very high quality compounder and low risk way to play this attractive niche with upside on a new long term plan.

Though not necessary, I highly recommend reading/listening to the Ingredients deep dive I cowrote with DualEdge Invest before reading this analysis, to have a better understand of what is the ingredient sector and what makes it so attractive to investors.

Ingredients: Reformulating the world - a resilient and high quality growth sector at an inflection point

Twice a week, I will release deep dives into stocks and sectors that fit into the three themes that I see winning in this age of tariffs and deglobalization: resilience, sovereignty & reshoring, China. I will then deep dive into the opportunities in the AI data center value chain.

Take advantage of this once in a generation opportunity to build long term wealth by investing in great stocks that will deliver returns for your portfolio for years to come.

You can already read my first 24 deep dives, all of which I see as winners in this new world of tariffs and deglobalization:

• ASML (reshoring & China idea): The most innovative company in the world will 2.5x its EPS by 2030.

• LKQ (resilience idea): The most defensive business in the auto industry is a tariff winner and could become a compounder.

• Atlas Copco (resilience, reshoring & China idea): The best industrials business in the world is on sale, extremely resilient and will benefit from US reshoring.

• Badger Meter (resilience idea): The perfect business in the perfect end market, water meters are the definition of resilience.

• Knorr Bremse (resilience idea): Who knew making brakes was this lucrative? Rerating with self help story and upside from German infra plan.

• Flex (reshoring idea): The electronics manufacturing giant building Nvidia’s servers and enabling reshoring is becoming a better business.

• Itron (resilience & reshoring idea): Riding the grid investment super cycle and enabling smart grids.

• Roper (resilience idea): A resilient cashflow compounder in the software space with inflecting growth.

• RELX (resilience idea): The company to own forever – one of the very best businesses on Earth.

• CPKC (resilience & reshoring idea): The rail connecting Canada/US/Mexico and benefiting from reshoring.

• Novo Nordisk (resilience idea): The most exciting pharma company in the world is misunderstood and its growth engine is ready to roar back to life.

• Kurita (resilience, reshoring & China idea): Water services expert with improving margins and benefiting from reshoring of semiconductor production.

• Halma (resilience idea): High quality compounder in safety, health and environmental technologies.

• Quanta Services (resilience & reshoring idea): Countercyclical compounder riding a multi decade infrastructure buildout.

• Infineon (China idea): Power semiconductor leader with strong structural drivers (AI power and China auto) amidst a cyclical recovery.

• Hubbell (resilience & reshoring idea): Pure play on US electrification demand driven by AI and grid investment cycle.

• Iberdrola (resilience & reshoring idea): Best integrated utility in the world with a stellar track record and solid growth driven by networks and renewables

• Nvidia (AI & data center idea): The backbone of the AI world is unstoppable.

• Veolia (resilience & reshoring idea): Resource management giant (water, waste, energy) due for a rerating.

• TJX (resilience idea): The retail giant that keeps winning.

• DSM-Firmenich (resilience idea): The diversified ingredient powerhouse benefiting from a transformational deal.

• Zoetis (resilience idea): Leader in animal healthcare.

• Prysmian (reshoring idea): Global cable leader entering a golden age.

• Bentley Systems (resilience & reshoring idea): The software compounder bringing infrastructure into the AI age.

After reading this article, you will understand why this company is such a high quality compounder, what it does, why its growth has outperformed its ingredient peers in 2024 and why it has a long growth runway thanks to many megatrends and how it has achieved the highest EBITDA margin in the sector.

In this article I go through:

1. Givaudan’s history and how it became the 2nd biggest ingredient company.

2. How the company is a a ​​defensive, low-beta and higher quality business, which is much less subject to tariffs impacts and geopolitical conflicts.

3. How the company aims to ride the powerful megatrends of the ingredient sector whilst keeping its best in class margins and FCF generation, underpinned by its powerful innovation engine.

4. How its long term objectives, which the company has handily beat, should be updated by the company next month.

Givaudan Investment Case