The Zacks Food – Miscellaneous industry hasn’t been in its best shape in 2018. Matters have been sour for most food companies, thanks to stiff competition and rising expenses stemming from input materials, freight and promotional activities. Incidentally, the Food – Miscellaneous industry has witnessed a decline of 19.8% year to date and the broader Zacks S&P 500 Composite lost 5.8%.
Nevertheless, not all food stocks have acted as spoilers. Few were able to maintain a strong winning streak in 2018, backed by well-spun strategies to meet changing consumers’ tastes and effectively combat market challenges. A vital success mantra for these companies was to focus on product innovation, while keeping in mind the aspect of nutrition. In fact, rising health consciousness is propelling companies to widen organic and natural offerings, which has been aiding revenues.
Additionally, food companies are focused on streamlining portfolio through strategic acquisitions and divestitures. This has enabled companies bolster presence in key market locations. Apart from these, some companies were able to sustain profits at desired levels through cost optimization. This was particularly effective in cushioning some of the unavoidable expenses, such as marketing and logistics. Further, some of the leading industry performers were able to benefit from expanding digital marketing capabilities and e-commerce operations.
Clearly, despite the food space being ranked among the bottom 35% out of more than 250 Zacks industries, there are some bright spots for investors to put their funds in 2019.
3 Promising Delicacies for 2019
We have zeroed in on three stocks from the food space that that have yielded on a year-to-date basis and have substantial growth potential in the upcoming year. Each of these stocks currently carry a Zacks Rank #2 (Buy) and have a market cap of at least $100 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
McCormick & Company, Incorporated (MKC - Free Report) , a renowned name in spices and seasonings, has gained as much as 39.3% year to date. Notably, the company delivered average positive earnings surprise of 5.2% in the trailing four quarters. Focus on acquisitions, such as the buyout of RB Foods, as well as savings through the Comprehensive Continuous Improvement program have been fueling performance. The company boasts a market cap of $18.5 billion. Moreover, it carries long-term earnings per share (EPS) growth rate of 9%.
Another stock that has outperformed the industry with its marvelous bull-run is The Chefs' Warehouse, Inc. (CHEF - Free Report) , which rallied 54.9% so far in the year. The company has outperformed earnings estimates by an average of 54.7% in the trailing four quarters. This leading specialty food products company is gaining from growth in e-commerce operations as well as acquisitions. To top it, the company has a market cap of nearly $951.9 million and a long-term EPS growth rate of 19%.
Investors can also count on Lamb Weston Holdings, Inc. (LW - Free Report) , which boasts stellar top- and bottom-line surprise history. Encouragingly, this frozen potato products supplier’s shares have rallied 32.1% this year. The company focuses on making investments to enhance capacity and improve customer services. Its unique limited time offers have been yielding. Further, the company’s effective price/mix is boosting results across sales channels. The company carries a long-term EPS growth rate of 11.8% and has a market cap of $10.8 billion.
In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?
These 10 are painstakingly handpicked from over 4,000 companies covered by the Zacks Rank. They are our primary picks poised to outperform in the year ahead. Be among the first to see the new Zacks Top 10 Stocks >>