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Food consumption could be higher as consumers focus on necessities with inflation still a global concern.
There are quite a few food retailers that will benefit from pricing power in the current market environment. Here are two that investors may want to consider for diversification on a global scale as we head into the new year.
With operations in more than 80 countries outside of the United States, Mondelez International is worthy of investors’ consideration and currently sports a Zacks Rank #2 (Buy).
Mondelez International's operating segments include – Latin America, Asia, the Middle East & Africa, Europe, and North America. Mondelez produces snack food products including chocolates, biscuits, cookies, crackers, gum & candy, along with beverages, cheese, and grocery products.The company has many popular brands including Oreo cookies, Toblerone chocolate, and Trident gum among others.
Mondelez’s earnings are now expected to rise 2% in 2022 and another 5% in FY23 to $3.09 per share. This year’s earnings estimate revisions have trended up over the last 90 days while FY23 is slightly down.
Sales are projected to climb 8% this year and rise 5% in FY23 to $32.68 billion. FY23 sales would represent 26% growth from pre-pandemic levels with 2019 sales at $25.86 billion.
Image Source: Zacks Investment Research
Year to date MDLZ is up +1% Vs. the S&P 500’s -19%. This has slightly lagged the Food Miscellaneous Market’s +3% YTD performance. Over the last five years, MDLZ’s total return is +75% to beat the benchmark and crush its Zacks Subindustry’s +20%.
Image Source: Zacks Investment Research
Regarding Mondelez International’s total return, the company offers a generous 2.30% annual dividend yield at $1.54 per share. This is much higher than the industry average dividend yield of 0.11%.
Trading around $67 a share, MDLZ trades at 22.8X forward earnings. This is slightly above the industry average of 19.7X but Mondelez has been a leader. Plus, MDLZ is trading nicely below its decade-high of 26.4X and closer to the median of 20.9X.
In addition to its solid dividend, the average Zacks Price Target still suggests 6% upside from current levels.
Famous Toll House chocolate chip maker Nestle (NSRGY - Free Report) looks like a strong investment going into 2023. Nestle is considered the world’s #1 food company as the global leader in coffee (Nescafe), mineral water (Perrier), and ophthalmology.
Nestle’s famous snack products include Baby Ruth and Butterfinger candy bars. The company also produces the popular dog food brand Alpo.
Nestles stock currently lands a Zacks Rank #2 (Buy) with earnings estimates on the rise. Earnings are now projected to rise 2% in 2022 at $4.96 per share. This is up from estimates of $4.89 a share 90 days ago. FY23 earnings are expected to climb another 7% with estimates also trending higher over the last quarter.
On the top line, sales are forecasted to jump 9% this year and another 4% in FY23 to $102.22 billion. FY23 sales would be a 9% increase from pre-pandemic levels with 2019 sales at $93.46 billion. This is impressive growth for a mature company of Nestle’s size.
Nestle stock is down -16% Year to date to slightly outperform the S&P 500. This has underperformed the Food-Miscellaneous Markets +3% YTD performance. However, over the last five years, Nestle’s total return is +49% to beat its Zacks Subindustry’s +20% and slightly trail the benchmark.
Image Source: Zacks Investment Research
Trading around $117 per share and 17% from its highs, Nestle stock trades at 23.5X forward earnings. This is above the industry average of 19.7X but Nestle trades at a nice discount relative to its past. Nestle trades 20% below its decade high of 29.2X and closer to the median of 21.7X.
Image Source: Zacks Investment Research
Even better, the average Zacks Price Target of $132 per share suggests 13% upside from current levels.
Bottom Line
With the Food Miscellaneous Industry currently in the top 18% of over 250 Zacks Industries, Nestle and Mondelez International provide unique global diversification in the space. Food consumption could be higher amid economic uncertainty in the global economy, making both companies worthy of consideration going into 2023.
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Time to Buy These Global Food Stocks for 2023?
Food consumption could be higher as consumers focus on necessities with inflation still a global concern.
There are quite a few food retailers that will benefit from pricing power in the current market environment. Here are two that investors may want to consider for diversification on a global scale as we head into the new year.
Mondelez International (MDLZ - Free Report)
With operations in more than 80 countries outside of the United States, Mondelez International is worthy of investors’ consideration and currently sports a Zacks Rank #2 (Buy).
Mondelez International's operating segments include – Latin America, Asia, the Middle East & Africa, Europe, and North America. Mondelez produces snack food products including chocolates, biscuits, cookies, crackers, gum & candy, along with beverages, cheese, and grocery products.The company has many popular brands including Oreo cookies, Toblerone chocolate, and Trident gum among others.
Mondelez’s earnings are now expected to rise 2% in 2022 and another 5% in FY23 to $3.09 per share. This year’s earnings estimate revisions have trended up over the last 90 days while FY23 is slightly down.
Sales are projected to climb 8% this year and rise 5% in FY23 to $32.68 billion. FY23 sales would represent 26% growth from pre-pandemic levels with 2019 sales at $25.86 billion.
Image Source: Zacks Investment Research
Year to date MDLZ is up +1% Vs. the S&P 500’s -19%. This has slightly lagged the Food Miscellaneous Market’s +3% YTD performance. Over the last five years, MDLZ’s total return is +75% to beat the benchmark and crush its Zacks Subindustry’s +20%.
Image Source: Zacks Investment Research
Regarding Mondelez International’s total return, the company offers a generous 2.30% annual dividend yield at $1.54 per share. This is much higher than the industry average dividend yield of 0.11%.
Trading around $67 a share, MDLZ trades at 22.8X forward earnings. This is slightly above the industry average of 19.7X but Mondelez has been a leader. Plus, MDLZ is trading nicely below its decade-high of 26.4X and closer to the median of 20.9X.
In addition to its solid dividend, the average Zacks Price Target still suggests 6% upside from current levels.
Nestle (NSRGY - Free Report)
Famous Toll House chocolate chip maker Nestle (NSRGY - Free Report) looks like a strong investment going into 2023. Nestle is considered the world’s #1 food company as the global leader in coffee (Nescafe), mineral water (Perrier), and ophthalmology.
Nestle’s famous snack products include Baby Ruth and Butterfinger candy bars. The company also produces the popular dog food brand Alpo.
Nestles stock currently lands a Zacks Rank #2 (Buy) with earnings estimates on the rise. Earnings are now projected to rise 2% in 2022 at $4.96 per share. This is up from estimates of $4.89 a share 90 days ago. FY23 earnings are expected to climb another 7% with estimates also trending higher over the last quarter.
On the top line, sales are forecasted to jump 9% this year and another 4% in FY23 to $102.22 billion. FY23 sales would be a 9% increase from pre-pandemic levels with 2019 sales at $93.46 billion. This is impressive growth for a mature company of Nestle’s size.
Nestle stock is down -16% Year to date to slightly outperform the S&P 500. This has underperformed the Food-Miscellaneous Markets +3% YTD performance. However, over the last five years, Nestle’s total return is +49% to beat its Zacks Subindustry’s +20% and slightly trail the benchmark.
Image Source: Zacks Investment Research
Trading around $117 per share and 17% from its highs, Nestle stock trades at 23.5X forward earnings. This is above the industry average of 19.7X but Nestle trades at a nice discount relative to its past. Nestle trades 20% below its decade high of 29.2X and closer to the median of 21.7X.
Image Source: Zacks Investment Research
Even better, the average Zacks Price Target of $132 per share suggests 13% upside from current levels.
Bottom Line
With the Food Miscellaneous Industry currently in the top 18% of over 250 Zacks Industries, Nestle and Mondelez International provide unique global diversification in the space. Food consumption could be higher amid economic uncertainty in the global economy, making both companies worthy of consideration going into 2023.