POST HOLDINGS INC. $90 (New York symbol POST; Consumer sector; Shares outstanding: 66.6 million; Market cap: $6.0 billion; No dividends paid; Takeover Target Rating: Medium; www.postholdings.com) is a leading maker of packaged foods. The U.S. supplies 87% of its sales.

The company has five operating units: Consumer Brands, Michael Foods, Active Nutrition, Private Brands, and Weetabix. Its main brands include Honey Bunches of Oats, Pebbles, Post Selects, Great Grains, Shredded Wheat, Post Raisin Bran, Grape Nuts, Power Bar, and Uncle Sam.

In 2012, Ralcorp Holdings spun off its cereals operations as Post Holdings. Since then, the new company has fuelled its growth with acquisitions of other food makers.

For example, it recently paid $1.5 billion for Bob Evans Farms’ refrigerated retail business. That includes breakfast sausages, and bacon, egg, potato and cheese products.

In April 2017, Post purchased British cereal manufacturer Weetabix for $1.8 billion. It makes the second-most-popular breakfast cereal in the U.K.

Thanks to those new businesses, Post’s sales jumped 159.5%, from $2.4 billion in 2014 to $6.3 billion in 2018 (the company’s fiscal years end September 30).

If you exclude unusual items, Post lost $0.42 a share (or a total of $1.2 billion) in 2014. However, earnings improved to $0.62 a share (or $52.7 million) in 2015, and jumped to $4.08 a share (or $309.6 million) in 2018.

Post borrowed the funds it need to buy those new businesses. As a result, its total debt more than doubled, from $3.8 billion in 2014 to $7.9 billion as of September 30, 2018. That’s a high 132% of its market cap. The company also held cash of $989.7 million.

To help simplify its operations and focus on its more-promising products, Post recently formed a new joint venture with private equity firm Thomas H. Lee Partners (THL) to hold its private label food operations.

Under the terms of the deal, Post received $250.0 million in cash and a 60.5% stake in the new venture, called 8th Avenue Food & Provisions. As well, THL agreed to assume $625.0 million of Post’s debt.

In November 2018, Post announced that it plans to set up its active nutrition division as a separate firm.

That business makes protein bars, shakes and nutritional supplements. In fiscal 2018, it reported sales of $827.5 million (13% of Post’s total sales) and gross profits of $124.4 million (15% of the total).

Post will initially sell—or “carve out”— about 20% of the active nutrition division through an initial public offering. It aims to complete that sale in mid-2019.

The company has yet to say what it will do with the remaining 80%. However, it’s likely that Post would eventually hand out those shares to its investors as a special dividend.

While the company’s aggressive growth-by-acquisition strategy adds risk, its plan to focus on faster-growing products should spur its long-term earnings.

The stock has gained 90% in the past five years, compared to 39% for the S&P 500. It trades at 15.7 times the $5.75 a share that Post will likely earn in fiscal 2019.

Post Holdings is a spinoff buy.