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Buy These 5 Food Stocks to Build a Stable Portfolio
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Wall Street has witnessed a dream run in the first quarter of 2024 after an impressive 2023. Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have advanced 5.4%, 10.7% and 11.1%, respectively. However, some intermittent fluctuations continued to hit U.S. stock markets.
In this regard, inclusion of some defensive stocks from the miscellaneous food industry will safeguard your portfolio if the market rally pauses due to internal or external reasons. The food industry exhibited resilience in the face of economic challenges in 2023 and looks well-placed for this year.
The last year was marked by inflation, which not only spiked up input costs for manufacturers but also weighed on consumers’ purchasing power, thereby affecting sales volumes of food space. However, an effective combination of a strong brand presence and a strategic pricing approach has empowered these companies to navigate the volatile economic landscape.
Near-Term Positives
Companies in this industry have been benefiting from robust pricing strategies implemented to weather the economic storm. Brand strength has been another major upside. Consumers’ loyalty to specific brands, combined with companies' unwavering focus on innovation, has been a driving force.
For instance, companies have been responding well to the growing consumer preference for healthy and nutritious food by introducing innovations in the organic product sector. The focus on expanding plant-based alternatives has particularly benefited companies offering meat products, which remain a significant component of consumers' shopping carts.
Apart from this, endeavors to enhance manufacturing capabilities and strengthen product portfolios have proven successful for numerous food companies, positioning them favorably for future growth. Their ability to adapt to evolving consumer preferences and market dynamics has emerged as a winning formula.
The Zacks-defined Consumer Staples – Miscellaneous Food Industry is currently in the top 26% of the Zacks Industry Rank. The industry has gained 5.2% year to date. Since it is ranked in the top half of Zacks Ranked Industries, we expect the consulting services industry to outperform the market over the next three to six months.
Our Top Picks
We have narrowed our search to five miscellaneous food stocks that have strong growth potential for 2024. These stocks have seen positive earnings estimate revision in the past 60 days. Each of our picks carries either a Zacks Rank # 1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Lancaster Colony Corp. (LANC - Free Report) is a manufacturer and marketer of specialty food products for the retail and foodservice markets. LANC’s wholly-owned subsidiaries, including T. Marzetti Company, produce and market high quality national and regionally-branded food products throughout the United States for the retail and foodservice markets.
Most of LANC’s products sold through the retail channel are marketed under its popular brand names, such as Marzetti, New York Brand Bakery, Sister Schubert's and Flatout. LANC’s production plants across the United States make an expanded family of quality food products found every day on the dinner tables of millions of consumers, as well as in well-known restaurant chains nationwide.
Zacks Rank #1 Lancaster Colony has an expected revenue and earnings growth rate of 3.1% and 34%, respectively, for the current year (ending June 2024). The Zacks Consensus Estimate for current-year earnings has improved 3.4% over the past 30 days.
Post Holdings Inc. (POST - Free Report) operates as a consumer-packaged goods holding company in the United States and internationally. POST operates through four segments: Post Consumer Brands, Weetabix, Foodservice, and Refrigerated Retail.
POST is involved in the production of center-of-the-store, refrigerated, foodservice, food ingredient and convenient nutrition product categories. POST is also engaged in the private brand food category.
Zacks Rank #1 Post Holdings has an expected revenue and earnings growth rate of 15.2% and 3.4%, respectively, for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings has improved 12.9% over the past 60 days.
Celsius Holdings Inc. (CELH - Free Report) specializes in commercializing healthier, nutritional functional foods, beverages and dietary supplements. CELH markets Celsius, the calorie burner, through its wholly-owned operating subsidiary, Celsius sells its products through grocery, drug, convenience, club and mass, and health and fitness channels.
Zacks Rank #2 Celsius Holdings has an expected revenue and earnings growth rate of 41.6% and 41.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 14.7% over the past 30 days.
General Mills Inc. (GIS - Free Report) has been gaining from the Accelerate strategy, which is highlighted by its key priorities. These include competing efficiently, investing in Holistic Margin Management and Strategic Revenue Management initiatives, and reshaping the brand’s portfolio.
GIS’ recent portfolio reshaping actions are likely to drive growth in the long-term. That said, saving and pricing actions should favor GIS. We forecast price/mix to be up 3.6% during fiscal 2024.
Zacks Rank #2 General Mills has an expected revenue and earnings growth rate of 1% and 3.2%, respectively, for the next year (ending May 2025). The Zacks Consensus Estimate for next-year earnings has improved 0.9% over the past seven days.
The Chefs' Warehouse Inc. (CHEF - Free Report) is a distributor of specialty food products in the United States. CHEF is focused on serving the specific needs of chefs who own and/or operate restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools and specialty food stores.
CHEF’s product portfolio includes artisan charcuterie, specialty cheeses, unique oils and vinegars, hormone-free protein, truffles, caviar, and chocolate. CHEF also offers cooking oils, butter, eggs, milk, and flour.
Zacks Rank #2 The Chefs' Warehouse has an expected revenue and earnings growth rate of 8.7% and 4.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the past 60 days.
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Buy These 5 Food Stocks to Build a Stable Portfolio
Wall Street has witnessed a dream run in the first quarter of 2024 after an impressive 2023. Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have advanced 5.4%, 10.7% and 11.1%, respectively. However, some intermittent fluctuations continued to hit U.S. stock markets.
In this regard, inclusion of some defensive stocks from the miscellaneous food industry will safeguard your portfolio if the market rally pauses due to internal or external reasons. The food industry exhibited resilience in the face of economic challenges in 2023 and looks well-placed for this year.
The last year was marked by inflation, which not only spiked up input costs for manufacturers but also weighed on consumers’ purchasing power, thereby affecting sales volumes of food space. However, an effective combination of a strong brand presence and a strategic pricing approach has empowered these companies to navigate the volatile economic landscape.
Near-Term Positives
Companies in this industry have been benefiting from robust pricing strategies implemented to weather the economic storm. Brand strength has been another major upside. Consumers’ loyalty to specific brands, combined with companies' unwavering focus on innovation, has been a driving force.
For instance, companies have been responding well to the growing consumer preference for healthy and nutritious food by introducing innovations in the organic product sector. The focus on expanding plant-based alternatives has particularly benefited companies offering meat products, which remain a significant component of consumers' shopping carts.
Apart from this, endeavors to enhance manufacturing capabilities and strengthen product portfolios have proven successful for numerous food companies, positioning them favorably for future growth. Their ability to adapt to evolving consumer preferences and market dynamics has emerged as a winning formula.
The Zacks-defined Consumer Staples – Miscellaneous Food Industry is currently in the top 26% of the Zacks Industry Rank. The industry has gained 5.2% year to date. Since it is ranked in the top half of Zacks Ranked Industries, we expect the consulting services industry to outperform the market over the next three to six months.
Our Top Picks
We have narrowed our search to five miscellaneous food stocks that have strong growth potential for 2024. These stocks have seen positive earnings estimate revision in the past 60 days. Each of our picks carries either a Zacks Rank # 1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Lancaster Colony Corp. (LANC - Free Report) is a manufacturer and marketer of specialty food products for the retail and foodservice markets. LANC’s wholly-owned subsidiaries, including T. Marzetti Company, produce and market high quality national and regionally-branded food products throughout the United States for the retail and foodservice markets.
Most of LANC’s products sold through the retail channel are marketed under its popular brand names, such as Marzetti, New York Brand Bakery, Sister Schubert's and Flatout. LANC’s production plants across the United States make an expanded family of quality food products found every day on the dinner tables of millions of consumers, as well as in well-known restaurant chains nationwide.
Zacks Rank #1 Lancaster Colony has an expected revenue and earnings growth rate of 3.1% and 34%, respectively, for the current year (ending June 2024). The Zacks Consensus Estimate for current-year earnings has improved 3.4% over the past 30 days.
Post Holdings Inc. (POST - Free Report) operates as a consumer-packaged goods holding company in the United States and internationally. POST operates through four segments: Post Consumer Brands, Weetabix, Foodservice, and Refrigerated Retail.
POST is involved in the production of center-of-the-store, refrigerated, foodservice, food ingredient and convenient nutrition product categories. POST is also engaged in the private brand food category.
Zacks Rank #1 Post Holdings has an expected revenue and earnings growth rate of 15.2% and 3.4%, respectively, for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings has improved 12.9% over the past 60 days.
Celsius Holdings Inc. (CELH - Free Report) specializes in commercializing healthier, nutritional functional foods, beverages and dietary supplements. CELH markets Celsius, the calorie burner, through its wholly-owned operating subsidiary, Celsius sells its products through grocery, drug, convenience, club and mass, and health and fitness channels.
Zacks Rank #2 Celsius Holdings has an expected revenue and earnings growth rate of 41.6% and 41.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 14.7% over the past 30 days.
General Mills Inc. (GIS - Free Report) has been gaining from the Accelerate strategy, which is highlighted by its key priorities. These include competing efficiently, investing in Holistic Margin Management and Strategic Revenue Management initiatives, and reshaping the brand’s portfolio.
GIS’ recent portfolio reshaping actions are likely to drive growth in the long-term. That said, saving and pricing actions should favor GIS. We forecast price/mix to be up 3.6% during fiscal 2024.
Zacks Rank #2 General Mills has an expected revenue and earnings growth rate of 1% and 3.2%, respectively, for the next year (ending May 2025). The Zacks Consensus Estimate for next-year earnings has improved 0.9% over the past seven days.
The Chefs' Warehouse Inc. (CHEF - Free Report) is a distributor of specialty food products in the United States. CHEF is focused on serving the specific needs of chefs who own and/or operate restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools and specialty food stores.
CHEF’s product portfolio includes artisan charcuterie, specialty cheeses, unique oils and vinegars, hormone-free protein, truffles, caviar, and chocolate. CHEF also offers cooking oils, butter, eggs, milk, and flour.
Zacks Rank #2 The Chefs' Warehouse has an expected revenue and earnings growth rate of 8.7% and 4.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the past 60 days.