Are These The Top Food Stocks To Buy [Or Sell] Now?
People eat regardless of how the broader stock market is performing. That’s why despite the pandemic, food stocks are starting to display signs of growth. Many shops are closed because the pandemic and global food supplies have been disrupted, and business owners are starting to be more creative to stay on top of the game during this unprecedented time. Many places are starting up to open up again with social distancing measures in place. This, coupled with the advancements in plant-based protein, food delivery, and protein processors are just some of the reasons why investors are looking for top food stocks to buy.
I’ll be honest, it was hard to even imagine being bullish on food companies earlier this year when the novel coronavirus first strikes the U.S. That’s probably because the industry was plagued by stagnant growths sales and declining profit margins. What’s more, some of the companies have accumulated high levels of debt on their books to fund acquisitions. But those with well-known brands have been able to maintain earnings and sales growth despite the coronavirus pandemic. After all, food is what we need on a daily basis, and demand is only getting stronger.
To take a big picture view of food stocks, one can have a look at the S&P Food & Beverage Select Industry Index. Note that this index includes beverage companies. In the past 12 months until mid-September, the index returned just over 8%, significantly underperforming the Russell 1000 which returned over 13%. We can come to various conclusions as to why some of the top food stocks to watch are underperforming this year. But would it be surprising to say that there could be more room for growth when the pandemic ends? Isn’t identifying growth opportunities what we should be doing as market participants? Let’s look at some of the trending food stocks that may be worth the additional attention in the stock market today.
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Top Food Stocks To Buy [Or Sell]: Beyond Meat
Beyond Meat (BYND Stock Report) is as unconventional as food stocks can go. No, it is not the stodgy old food brand you know. Shares of the company have been trending higher for the past one month, and just yesterday, BYND stock popped again after Piper Sandley analyst raised its price target on the stock to $178, which is about $5 lower than the current stock price. The shares of plant-based meat have risen so fast, it overshoots analysts’ price targets. If you have been following our feed closely, you would know we are an avid fan of the plant-based meat burger. Since our coverage from mid-May, BYND stock has gone up around 30%. The stock has gone up more than 140% year to date. These sorts of numbers might even make you think BYND is a tech or biotech stock.
There are many reasons for optimism around BYND stocks. Thanks to a global rise of vegan and vegetarian diets, many consumers are making the switch. They realize the health benefits of such diets. And perhaps news of the coronavirus reminds consumers of their own mortality, encouraging them to make lifestyle changes to improve their health. And consuming plant-based meat is the perfect way to start. Of course, there are others who are just curious about how plant-based meat compares to the real thing.
The companies have partnered with retail giants like Walmart (WMT Stock Report) and Kroger (KR Stock Report) to have an easy reach with the average Americans. To top it all off, Beyond Meat is also partnering with major food chains such as McDonald’s (MCD Stock Report) and Starbucks (SBUX Stock Report) as a more proactive approach to getting consumers to slowly accept the plant-based meat. Who knows, some consumers might take the leap to try plant-based meat and end up liking it in the longer term. Given the market expansion exercises, many analysts are hopeful that BYND stock could go higher in the long run.
Top Food Stocks To Buy [Or Sell]: General Mills
The next food stock to watch is General Mills Inc. (GIS Stock Report). General Mills is a food producer that sells packaged foods in supermarkets all over the world. Some of its popular brands include Totino’s, Pillsbury, Haagen-Dazs, Cheerios, Lucky Charms, and many more. General Mills actively holds more than 100 brands under its umbrella. On September 23rd, the company released its fiscal 2021 first-quarter results. Net sales for the company increased by 9% to $4.4 billion. Its organic net sales rose by 10% as well. General Mills’ operating profit went up 29% to $854 million.
The CEO of the company, Jeff Harmening stated, “We continued to drive exceptional results this quarter, highlighted by broad-based market share gains amid elevated at-home food demand due to the COVID-19 pandemic.”
Amid times of uncertainty, the company is hiking its dividend. That will prove attractive to defensive investors, or any investor who wants to add stability to his or her portfolio. Of course, not all of General Mills’ businesses are performing well. For instance, its convenience store sales are lackluster, no thanks to people staying at home. But overall, the company is doing fairly well. If you think about it, that’s the magic of a diversified company, isn’t it? That said, would GIS stock be attractive enough to be on your watchlist this week?
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Top Food Stocks To Buy [Or Sell]: Domino’s Pizza
Domino’s Pizza (DPZ Stock Report) has been one of the best food stocks to buy in the market. In fact, DPZ stock was a favorite among investors long before the pandemic struck. Admittedly, it is probably better known for its delivery than its restaurants. Domino is implementing a “long-term playbook” that could potentially extend the brand’s success. With menu and technological innovation, expanded value offerings, and more advertising spending, DPZ stands a good chance to continue to enjoy high growth.
The pizza delivery leader is slated to report its third-quarter report on Thursday. The company released a set of strong second-quarter results earlier this year. But this coming quarter will be crucial because Papa John’s appears to be winning some market share during the last quarter. As a result, it wouldn’t be surprising if investors are holding back their bullets. Who knows? That’s just in case the third quarter couldn’t live up to the expectations.
Sure, DPZ stock has had a good run and its share price increased by more than 45% year-to-date. If you have been a long-term shareholder, you would be glad to know that since 2009, the shares have gone up about 84 times. That’s staggering to think of it. DPZ stock has even put some of the biggest tech names to shame. While pizzas don’t always sound exciting, the company can certainly reward investors in the years ahead. The question is, can DPZ grow at the same pace as it did for the past decade?