The stock industry has been in the spotlight in recent times, and food stocks are on the front burner. Because of its direct impact on consumer demand and behavior, it doesn’t take much for one to realize why food stocks are the talk of the day.
To illustrate its strong connection to consumers and how food businesses are thriving worldwide, it may interest you to know that the global food revenue leaped by a record 20% to hit 8.2 trillion dollars.
This massive leap came at a time when virtually every industry is grappling with the coronavirus — downsizing and furloughing. The global food supply chain got its fair share of disruption in the heat of the pandemic, leading to a sharp increase in the demand for food. While customers got into a race to stock up on food during the global lockdown, there was a stunning 76% increase in convenience food sales.
The food industry worldwide is diverse and has myriad sub-sectors one can invest in. However, earlier in October 2020, Moody reported a decline in sales and earnings of businesses in the packaged food industry. Moreover, the decline will be steeper in 2021 compared to what it was earlier in 2020.
However, the Moody report also forecasted a strong rebound in the industry come 2022 and beyond.
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What is the impact of coronavirus on consumer behavior?
Available facts and figures showed that the pandemic skyrocketed the number of at-home food consumers due to the government’s ban on outdoor dining.
Statistics from the International Food Information Council (IFIC) on food and health survey in 2020 showed that 60% of Americans resorted to cooking at home during the Coronavirus outbreak. And another 32% of the study population said they took to snacking more during the same period. In addition to that, another 27% of the respondents said that they think about food more than they usually do.
What do these figures tell you?
It points to the fact that the food industry is on a growth trajectory, and food stocks are reaching for the stars.
As consumers continue to tap into their cooking side and become more confident in the kitchen, major food companies like Conagra Brands and Campbell Soup Co. are recording huge profits and revenue growth. All thanks to changing consumer behavior.
To adequately cater to the demands of consumers and make the most of changing consumer behavior at this time, food industries or companies are adopting new strategies to help them adapt and keep their business going.
Food stocks you should consider buying today
- Unilever N.V common stock
Unilever is a multinational giant in the food industry that is popular for various products, including food, confections, baby food, soft drinks, ice creams, energy drinks, and tea.
In the third quarter of 2020, Unilever reportedly posted revenue of €12.93 billion, blowing past the Wall Street projection by an impressive €240 million. Earlier in November 2020, the company announced its goal to hit €1 billion on annual sales of plant-based meat and dairy alternatives for the next five to seven years.
At the end of the third quarter, at least 19 hedge funds have a stake in Unilever.
- Ingles Markets Inc. (IMKTA)
From grocery to non-foods, perishables, and other food categories, Ingles Markets Inc is regarded as one of the best food value stocks out there. According to its Q1 financial results, the company recorded a 204.3% increase in net income as net sales grew 10.4%.
- Campbell Soup Co. (CPB)
Campbell Soup is the ingenious mind behind food and beverage products, including the popular Prego pasta sauces, Pace Mexican sauces, V8 juices, Emerald nuts, and many more.
In its recent financial results for Q2 FY 2021 (which ended on January 31, 2021), the company’s earnings from continuing operations rose 43.3% while net sales for the same period Ekene 5.4%.
- Albertsons Companies Inc. (ACI)
Albertsons is a grocery store company that has interests in food and drug retail stores. It deals in various products ranging from groceries, general merchandise, health and beauty care products, pharmacy, and a long list of other items and services, including fuel.
Mind you, these stocks — Ingles Markets Inc., Campbell Soup Co., Albertsons Companies Inc., are best value food stocks. Meaning that they have a low 12-month trailing price-to-earnings (P/E) ratio.
Profits in such stocks can be paid to shareholders in the form of dividends and buybacks. And with a low P/E ratio, you will be paying less of every dollar generated in profits.
In addition to the best value food stocks we discussed earlier, you can also consider the fastest-growing food stocks, such as The Kraft Heinz Co. (KHC) and SpartanNash Co. (SPTN).
These stocks are regarded as the fastest-growing food stocks because they yield the highest year-over-year (YOY) earnings per share (EPS). As such, the companies are generating a lot more money they can reinvest or return to shareholders.