Lamb Weston was the worst-performing stock in the S&P 500 on Wednesday after reporting disappointing quarterly results. The Idaho-based supplier of frozen potatoes, sweet potatoes, appetizers and vegetable products to restaurants said its fully diluted earnings per share fell more than 70% from the same period a year ago. The company also issued an outlook that fell short of its targets. Here are some “highlights” from their final quarter of fiscal 2024, which ended May 31: Net revenue down 5% to $1.612 billion Diluted EPS down 74% to 89 cents Net revenue up 21% to $6.468 billion Operating income up 21% to $1.065 billion Net income down 28% to $726 million Full-year diluted EPS down 28% to $4.98 From their fiscal 2025 outlook (guidance): Net revenue from $6.6 billion to $6.8 billion Net income from $630 million to $705 million and diluted EPS from $4.35 to $4.85 Adjusted EBITDA from $1.380 billion to $1.480 billionIt’s important to note that the reported sales and operating income increases were almost entirely due to acquisitions—not organic growth. As a result, the stock fell more than 28% on Wednesday. There are quite a few alarm bells ringing here. There is no organic growth, and it’s unlikely that management didn’t see the disappointing price/mix a few months ago when they reported their Q3 results. However, Lamb Weston is in the potato business, and while Wednesday’s credit card debt numbers provided another disappointing data point regarding the US consumer, people need to eat eventually. At ~1.2x sales, Lamb Weston is the cheapest the company has been in the last ten years. Even taking the lower end of management’s 2025 financial guidance of $4.35 in diluted EPS, that’s still below 13 times projected earnings. Short-term option premiums typically decline when a catalyst like earnings comes and goes in what’s commonly referred to as a “price move.” However, when earnings overshadow investors and the stock gaps, long-term option premiums can sometimes rise. That’s the case here. Some of that increase is justified; the company has demonstrated significantly higher operating volatility than they or investors expected, and the increase in debt-to-equity as a function of the decline in the stock price is also a contributing factor. This trade could present an opportunity, though. For example, the September 50/60/65 call risk reversal was trading at a modest credit of $0.35/contract as of yesterday’s close. A call risk reversal involves selling a bearish put to help finance the purchase of a bullish put. In this case, it involves selling the September $50 put, buying the September $60 call, and selling the September $65 call. By selling the bearish put, an investor faces the risk of buying the stock at the $50 strike price in the event that Lamb Weston declines further — a reasonable possibility if institutional holders decide they don’t want to wait for another potential earnings disappointment. However, buying the stock at ~1x sales and 11.3x the lower end of the company’s guidance does provide a margin of safety. Former Berkshire Hathaway Vice Chairman Charlie Munger may despise this type of investing. He even called it the “cigar butt strategy,” in which investors look for discarded cigar butts to see how much puff is left in them. I agree that it’s better to look for companies that are growing faster than the overall economy, and preferably faster than the S&P 500. However, I don’t believe the potato business is going away, even if it’s not growing as fast as other sectors. It also seems like investors are starting to worry about the valuations of some of the highest-flying names, so moving into low-growth, low-value names that are on sale could reduce the volatility of your portfolio. DISCLOSURE: None. All opinions expressed by CNBC Pro contributors are solely their own and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent companies or their affiliates and may have been previously disseminated by them on television, radio, the internet or other media. THE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND OUR PRIVACY POLICY. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED TO BE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO PURCHASE ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS OF A GENERAL NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE CIRCUMSTANCES. THE CONTENT MAY NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISION, YOU SHOULD CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here to view full disclaimer.