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Higher inflation has given the Food-Miscellaneous Industry a boost this year with a collective 6% total return in 2022 to largely outperform the broader market. The Food-Miscellaneous industry is part of the Consumers Staples sector and is currently in the top 25% of over 250 Zacks Industries.
Let’s take a look at three highly-ranked stocks in the industry that could continue their strong performances in December and into 2023.
Conagra Brands (CAG - Free Report) makes the list and the food manufacturer and marketer may continue to enjoy pricing power with its iconic brands such as Hunt’s, Healthy Choice, and Slim Jim.
Hovering near 52-week highs around $38 a share, CAG lands a Zacks Rank #2 (Buy) with earnings estimates revisions on the rise.
Earnings are now expected to be up 3% in the company’s current FY23. Fiscal 2024 EPS is expected to pop another 5% at $2.56 per share. On the top line, sales are projected to be up 5% in FY23 and rise another 1% in FY24 to $12.27 billion.
Conagra Brands stock is up +12% YTD vs. the S&P 500’s -18% and the food Miscellaneous Markets +3%. Even better, over the last three years, CAG is up +43% when including its dividend to beat the benchmark and its Zacks subindustry’s +21%.
Image Source: Zacks Investment Research
CAG trades at 15.3X forward earnings.This is below the industry average of 19.3X. Plus, CAG shares trade 36% below its decade-high of 24.1X and on par with the median of 15.1X during this period. And CAG currently has a generous 3.51% dividend yield at $1.32 a share.
The next stock on the list doesn’t need much of an introduction. As an iconic global manufacturer and marketer of branded consumer foods, General Mills (GIS - Free Report) stock is worthy of consideration in the current market environment.
Brands such as Cheerios, Pillsbury, and Nature Valley have enjoyed pricing power as inflation rose over the year. GIS currently lands a Zacks Rank #2 (Buy).
GIS’s current fiscal year 2023 earnings are now expected to climb 4% at $4.09 per share compared to $3.99 a share last quarter. FY24 earnings are forecasted to jump another 6%. Sales are projected to rise 3% in FY23 and another 2% in FY24 to $19.94 billion.
GIS stock has climbed an impressive +28% YTD to blast the benchmark and the Food Miscellaneous Markets +3%. Over the last three years, GIS’s total return is +79% to edge the benchmark and its Zacks Subindustry’s +21%.
Image Source: Zacks Investment Research
Trading around $87 per share, GIS has a forward P/E of 20.8X. This is roughly on par with the industry average and a 11% discount to its decade high of 23.5X. General Mills also offers investors a solid 2.53% annual dividend yield at $2.16 a share.
Maybe the last but not least, Chef’s Warehouse (CHEF - Free Report) sports a Zacks Rank #1 (Strong Buy). Earnings estimate revisions have trended significantly higher for this year and FY23. The Chef’s warehouse niche as a distributor of specialty foods products is paying off.
The company’s higher-end clients of chefs, country clubs, and fine dining establishments (among others) can continue to spend in a tougher economic environment for most consumers. Chef’s product portfolio includes ingredients such as specialty cheeses, unique oils and vinegar, and caviar that will remain a necessity for upscale dining.
Earnings are now expected to swing to $1.50 per share this year compared to an adjusted loss of -$0.05 a share in 2021. Fiscal 2022 earnings estimates have also risen 10% from $1.36 a share last quarter. FY23 earnings are forecasted to jump another 9%. Sales are projected to rise 46% this year and another 9% in FY23 to $2.80 billion.
CHEF stock is up +13% YTD to blast the benchmark and top the Food Miscellaneous Market. Even better, CHEF has climbed +50% over the last two years to crush the benchmark and its Zacks Subindustry’s +7%.
Image Source: Zacks Investment Research
CHEF trades at 25.2X forward earnings with shares around $37. This is higher than the industry average of 19.3X but CHEF is seeing impressive growth and earnings estimates have continued to rise. Plus, CHEF trades at a 50% discount to its decade-high of 50.9X and also below the median of 29.7X. The average Zacks Price Target of $47.83 offers 26% upside from current levels.
Image Source: Zacks Investment Research
Bottom Line
These Food-Miscellaneous stocks may continue to add valuable protection against inflation going into 2023. All of these companies look poised for growth in what is expected to be another challenging year for the broader economy.
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Time to Buy These 3 Food Stocks for 2023
Higher inflation has given the Food-Miscellaneous Industry a boost this year with a collective 6% total return in 2022 to largely outperform the broader market. The Food-Miscellaneous industry is part of the Consumers Staples sector and is currently in the top 25% of over 250 Zacks Industries.
Let’s take a look at three highly-ranked stocks in the industry that could continue their strong performances in December and into 2023.
Conagra Brands (CAG - Free Report)
Conagra Brands (CAG - Free Report) makes the list and the food manufacturer and marketer may continue to enjoy pricing power with its iconic brands such as Hunt’s, Healthy Choice, and Slim Jim.
Hovering near 52-week highs around $38 a share, CAG lands a Zacks Rank #2 (Buy) with earnings estimates revisions on the rise.
Earnings are now expected to be up 3% in the company’s current FY23. Fiscal 2024 EPS is expected to pop another 5% at $2.56 per share. On the top line, sales are projected to be up 5% in FY23 and rise another 1% in FY24 to $12.27 billion.
Conagra Brands stock is up +12% YTD vs. the S&P 500’s -18% and the food Miscellaneous Markets +3%. Even better, over the last three years, CAG is up +43% when including its dividend to beat the benchmark and its Zacks subindustry’s +21%.
Image Source: Zacks Investment Research
CAG trades at 15.3X forward earnings.This is below the industry average of 19.3X. Plus, CAG shares trade 36% below its decade-high of 24.1X and on par with the median of 15.1X during this period. And CAG currently has a generous 3.51% dividend yield at $1.32 a share.
Image Source: Zacks Investment Research
General Mills (GIS - Free Report)
The next stock on the list doesn’t need much of an introduction. As an iconic global manufacturer and marketer of branded consumer foods, General Mills (GIS - Free Report) stock is worthy of consideration in the current market environment.
Brands such as Cheerios, Pillsbury, and Nature Valley have enjoyed pricing power as inflation rose over the year. GIS currently lands a Zacks Rank #2 (Buy).
GIS’s current fiscal year 2023 earnings are now expected to climb 4% at $4.09 per share compared to $3.99 a share last quarter. FY24 earnings are forecasted to jump another 6%. Sales are projected to rise 3% in FY23 and another 2% in FY24 to $19.94 billion.
GIS stock has climbed an impressive +28% YTD to blast the benchmark and the Food Miscellaneous Markets +3%. Over the last three years, GIS’s total return is +79% to edge the benchmark and its Zacks Subindustry’s +21%.
Image Source: Zacks Investment Research
Trading around $87 per share, GIS has a forward P/E of 20.8X. This is roughly on par with the industry average and a 11% discount to its decade high of 23.5X. General Mills also offers investors a solid 2.53% annual dividend yield at $2.16 a share.
Image Source: Zacks Investment Research
The Chef’s Warehouse (CHEF - Free Report)
Maybe the last but not least, Chef’s Warehouse (CHEF - Free Report) sports a Zacks Rank #1 (Strong Buy). Earnings estimate revisions have trended significantly higher for this year and FY23. The Chef’s warehouse niche as a distributor of specialty foods products is paying off.
The company’s higher-end clients of chefs, country clubs, and fine dining establishments (among others) can continue to spend in a tougher economic environment for most consumers. Chef’s product portfolio includes ingredients such as specialty cheeses, unique oils and vinegar, and caviar that will remain a necessity for upscale dining.
Earnings are now expected to swing to $1.50 per share this year compared to an adjusted loss of -$0.05 a share in 2021. Fiscal 2022 earnings estimates have also risen 10% from $1.36 a share last quarter. FY23 earnings are forecasted to jump another 9%. Sales are projected to rise 46% this year and another 9% in FY23 to $2.80 billion.
CHEF stock is up +13% YTD to blast the benchmark and top the Food Miscellaneous Market. Even better, CHEF has climbed +50% over the last two years to crush the benchmark and its Zacks Subindustry’s +7%.
Image Source: Zacks Investment Research
CHEF trades at 25.2X forward earnings with shares around $37. This is higher than the industry average of 19.3X but CHEF is seeing impressive growth and earnings estimates have continued to rise. Plus, CHEF trades at a 50% discount to its decade-high of 50.9X and also below the median of 29.7X. The average Zacks Price Target of $47.83 offers 26% upside from current levels.
Image Source: Zacks Investment Research
Bottom Line
These Food-Miscellaneous stocks may continue to add valuable protection against inflation going into 2023. All of these companies look poised for growth in what is expected to be another challenging year for the broader economy.