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4 Stocks to Add to Your Portfolio on Soaring Grocery Sales
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U.S. wholesale prices fell in March, indicating that inflationary pressures are easing. The Fed had been aggressively hiking interest rates for over a year to fight soaring inflation. The measure is finally bearing fruit. However, the fight to bring down inflation to the Fed’s target level is still a far cry.
This is likely to result in more interest hikes in the coming months, which was also hinted at by the Fed earlier this year. Consumers are spending cautiously, but it’s quite difficult to cut down spending on essentials, especially groceries. Hence, despite retail sales slowing due to sky-high commodity prices, grocery sales have been on the rise.
Given this situation, stocks like Lamb Weston Holdings, Inc. (LW - Free Report) , General Mills, Inc. (GIS - Free Report) , Conagra Brands, Inc. (CAG - Free Report) and McCormick & Company, Incorporated (MKC - Free Report) are likely to benefit in the near term.
Grocery Sales on the Rise
Retail sales have been rising at a slower pace as people are cautiously spending on essentials. According to the latest Mastercard SpendingPulse, retail sales grew 4.7% year over year in March in the United States. March’s growth was slower than the prior month when retail sales grew 6.9% year over year.
However, grocery sales have been rising steadily, driving overall retail sales. Although major segments recorded a decline, grocery sales rose 5.6% year over year in March.
Separately, the Brick Meets Click/Mercatus Grocery Shopping Survey showed online grocery sales recorded sales of $8 billion in March. Given that there is no room to cut down on spending on essentials like food products, groceries continue to be the bright spot in the retail sector.
Groceries fall under the consumer staples sector, which is fundamentally sound and mature, given that demand is mostly resilient to changes in the economic cycle. Companies in this category are defensive since they primarily sell essentials.
The Consumer Staples Select Sector SPDR (XLP) has gained 10% over the last six months.
Moreover, the jump in grocery sales comes as the latest data from the Labor Department, released on Apr 13, showed that wholesale prices declined sharply in March.
The Producer Price Index (PPI) fell 0.5% in March after remaining unchanged in the first two months of the year. Wholesale prices were up 2.7% in March from a year ago, which is also significantly less than the 4.7% increase recorded in February.
This is another sign that costs may finally be falling, which is good news for the grocery market.
Our Choices
Given this situation, it would be wise to invest in these four food and grocery stocks. Each of the stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Lamb Weston Holdings, Inc. is a leading global manufacturer, marketer and distributor of value-added frozen potato products, particularly French fries, and provides a range of appetizers. LW, along with its joint venture allies, is the top frozen potato products supplier in North America, while it also operates internationally, with a robust and growing presence in emerging markets.
Lamb Weston’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 10.4% over the past 60 days. LW presently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
General Mills, Inc. is a global manufacturer and marketer of branded consumer foods sold through retail stores. The company also serves the foodservice and commercial baking industries. General Mills’ principal product categories include ready-to-eat cereals, convenient meals, snacks (including grain, fruit and savory snacks, nutrition bars, and frozen hot snacks), super-premium ice creams as well as baking mixes and ingredients.
General Mills’ expected earnings growth rate for the current year is 7.4%. The Zacks Consensus Estimate for current-year earnings has improved 2.7% over the past 60 days. GIS currently carries a Zacks Rank #2.
Conagra Brands, Inc. is one of the leading branded food companies of North America. CAG offers premium edible products with a refined focus on innovation. Conagra Brands maintains a highly dynamic product portfolio and incorporates alterations within it as per the preference pattern of the end-users.
Conagra Brands’ expected earnings growth rate for the current year is 15.7%. The Zacks Consensus Estimate for current-year earnings has improved 2.6% over the past 60 days. CAG currently has a Zacks Rank #2.
McCormick & Company, Incorporated is a leading manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors to the entire food industry across the entire globe. MKC’s key sales, distribution and production facilities are located in North America and Europe.
McCormick & Company’s expected earnings growth rate for the current year is 2.8%. Shares of MKC have gained 6.6% over the past six months. McCormick & Companycurrently has a Zacks Rank #2.
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4 Stocks to Add to Your Portfolio on Soaring Grocery Sales
U.S. wholesale prices fell in March, indicating that inflationary pressures are easing. The Fed had been aggressively hiking interest rates for over a year to fight soaring inflation. The measure is finally bearing fruit. However, the fight to bring down inflation to the Fed’s target level is still a far cry.
This is likely to result in more interest hikes in the coming months, which was also hinted at by the Fed earlier this year. Consumers are spending cautiously, but it’s quite difficult to cut down spending on essentials, especially groceries. Hence, despite retail sales slowing due to sky-high commodity prices, grocery sales have been on the rise.
Given this situation, stocks like Lamb Weston Holdings, Inc. (LW - Free Report) , General Mills, Inc. (GIS - Free Report) , Conagra Brands, Inc. (CAG - Free Report) and McCormick & Company, Incorporated (MKC - Free Report) are likely to benefit in the near term.
Grocery Sales on the Rise
Retail sales have been rising at a slower pace as people are cautiously spending on essentials. According to the latest Mastercard SpendingPulse, retail sales grew 4.7% year over year in March in the United States. March’s growth was slower than the prior month when retail sales grew 6.9% year over year.
However, grocery sales have been rising steadily, driving overall retail sales. Although major segments recorded a decline, grocery sales rose 5.6% year over year in March.
Separately, the Brick Meets Click/Mercatus Grocery Shopping Survey showed online grocery sales recorded sales of $8 billion in March. Given that there is no room to cut down on spending on essentials like food products, groceries continue to be the bright spot in the retail sector.
Groceries fall under the consumer staples sector, which is fundamentally sound and mature, given that demand is mostly resilient to changes in the economic cycle. Companies in this category are defensive since they primarily sell essentials.
The Consumer Staples Select Sector SPDR (XLP) has gained 10% over the last six months.
Moreover, the jump in grocery sales comes as the latest data from the Labor Department, released on Apr 13, showed that wholesale prices declined sharply in March.
The Producer Price Index (PPI) fell 0.5% in March after remaining unchanged in the first two months of the year. Wholesale prices were up 2.7% in March from a year ago, which is also significantly less than the 4.7% increase recorded in February.
This is another sign that costs may finally be falling, which is good news for the grocery market.
Our Choices
Given this situation, it would be wise to invest in these four food and grocery stocks. Each of the stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Lamb Weston Holdings, Inc. is a leading global manufacturer, marketer and distributor of value-added frozen potato products, particularly French fries, and provides a range of appetizers. LW, along with its joint venture allies, is the top frozen potato products supplier in North America, while it also operates internationally, with a robust and growing presence in emerging markets.
Lamb Weston’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 10.4% over the past 60 days. LW presently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
General Mills, Inc. is a global manufacturer and marketer of branded consumer foods sold through retail stores. The company also serves the foodservice and commercial baking industries. General Mills’ principal product categories include ready-to-eat cereals, convenient meals, snacks (including grain, fruit and savory snacks, nutrition bars, and frozen hot snacks), super-premium ice creams as well as baking mixes and ingredients.
General Mills’ expected earnings growth rate for the current year is 7.4%. The Zacks Consensus Estimate for current-year earnings has improved 2.7% over the past 60 days. GIS currently carries a Zacks Rank #2.
Conagra Brands, Inc. is one of the leading branded food companies of North America. CAG offers premium edible products with a refined focus on innovation. Conagra Brands maintains a highly dynamic product portfolio and incorporates alterations within it as per the preference pattern of the end-users.
Conagra Brands’ expected earnings growth rate for the current year is 15.7%. The Zacks Consensus Estimate for current-year earnings has improved 2.6% over the past 60 days. CAG currently has a Zacks Rank #2.
McCormick & Company, Incorporated is a leading manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors to the entire food industry across the entire globe. MKC’s key sales, distribution and production facilities are located in North America and Europe.
McCormick & Company’s expected earnings growth rate for the current year is 2.8%. Shares of MKC have gained 6.6% over the past six months. McCormick & Companycurrently has a Zacks Rank #2.