4 Food Stocks To Watch Right Now
With inflation at a 40-year high, it is not surprising that investors in the stock market may be rotating into more defensive sectors. In particular, they may be looking for companies that are able to pass on higher costs to consumers. As such, food stocks could fit the bill as consumers will always need to eat. Thus, demand for food will likely remain stable regardless of the state of the economy. This comes as fears of a possible recession continue to occupy the minds of many.
Yesterday, a report from Placer.ai showed that fast-food chains have been finding their way through the inflation crisis. The report showed that the fast-food industry has been maintaining relatively steady foot traffic year-over-year. In fact, Chipotle (NYSE: CMG) and a few others have even been outpacing their pre-pandemic levels. Elsewhere, investors may be looking at the likes of Sanderson Farms (NASDAQ: SAFM), one of the largest chicken producers in the country. Last month, the company reported stellar quarterly results with earnings per share ballooning 231% year-over-year to $14.39. As it stands, SAFM stock has risen more than 20% in price over the past year. Given these developments, here are four other food stocks to watch in the stock market today.
Food Stocks To Buy [Or Sell] Right Now
The Coca-Cola Company
Starting off our list today is Coca-Cola. In essence, it is a company that sells its products in more than 200 countries and territories. Its multiple billion-dollar brands can be found across various beverage categories worldwide. These notable brands include the likes of Coca-Cola, Sprite, and Fanta to name a few. Next to soft drinks, the company also offers sports, coffee, and tea brands. For a sense of scale, Coca-Cola hires more than 700,000 employees across the globe.
Yesterday, the company announced that it is teaming up with Jack Daniel’s distiller Brown-Forman (NYSE: BF-A) to make a Jack-and-Coke cocktail in a can. This marks the fourth new alcoholic drink in Coke’s portfolio in less than two years. Prior to this, the company partnered with Molson Coors Beverage (NYSE: TAP) and Constellation Brands (NYSE: STZ) on alcoholic drinks. However, this represents the first pairing for its namesake soda. As soda consumption declines, Coca-Cola’s continued efforts of diversifying its alcohol portfolio makes strategic sense. Moreover, according to IWSR Drinks Market Analysis, ready-to-drink beverages have been the fastest-growing alcohol segment since 2018, with it stealing market share from beer. Given Coca-Cola’s effort in diversification, is KO stock worth buying?
The J.M. Smucker Company
Following that, we have The J.M. Smucker Company, also known simply as Smucker. The company’s business units can be segmented into consumer foods, pet foods, and coffee. Its flagship brand, Smucker’s, produces fruit preserves, peanut butter, syrups, and more. Besides its namesake brand, the company also has other food and coffee brands such as Jif, Knott’s Berry Farm, Folgers, and more under its brand portfolio. Last week, the company posted its financial results for the fourth quarter of its 2022 fiscal year ending April 30, 2022.
Jumping right in, the company reported net sales of $2.03 billion for the quarter. Compared to the same period last year, this is an increase of $113.6 million or 6%. The company saw its U.S. retail pet food and retail coffee sales jumping by 6% and 11% respectively. As for its earnings, Smuckers brought in a net income of $202.1 million, a commendable increase of 37% from a year ago. Accordingly, its adjusted earnings per share were $2.23, up by 18% year-over-year. In the same report, the company also provided its fiscal year 2023 outlook. Namely, it expects net sales to grow by 3.5% to 4.5%. With this solid quarter in the books, should you add SJM stock to your portfolio?
Another food stock that investors may be keeping tabs on is Hormel Foods. For the most part, it is a food processing company that produces a range of meat and food products. It mainly operates in four segments, Refrigerated Foods, Grocery Products, Jennie-O Turkey Store, and International & Other. The company serves over 80 countries with brands that include the likes of Planters, Columbus, SPAM, and Skippy among other beloved brands. And for a sense of scale, the company has approximately 20,000 employees.
On May 31, the company posted record sales and double-digit earnings growth for its second quarter. For starters, net sales were up by 19% to a record $3.1 billion. For comparison, Hormel posted $2.61 billion during the prior year. Besides that, operating income came in at $335 million, a healthy increase of 16% year-over-year. As for its profits, Hormel posted diluted earnings per share of $0.48, rising by 14% from last year. The company also reaffirmed its outlook in the report. Notably, it expects its net sales to range from $11.7 billion to $12.5 billion. With the company pulling in strong numbers, should you invest in HRL stock?
[Read More] 4 Top Financial Stocks To Watch In June 2022
Last, but not least, we have Mondelez. Essentially, it is a company that manufactures and markets snack food and beverage products. Its brand portfolio includes the likes of famous snack brands such as Nabisco, Oreo, Cadbury, Milka, and Toblerone to name a few. Besides that, it manufactures Trident gum, Halls candy, and Tang powdered beverages. Mondelez has operations in about 80 countries and sells its products in over 150 countries. At the company’s recent investor day, it shared an update on its long-term growth strategy.
Specifically, it updated its long-term algorithm to range from 3% to 5% growth in organic net revenue, up from 3%+. Besides that, the company wants to increase its focus on chocolate and biscuits, an area that is core to its portfolio. Baked snacks are also a segment that Mondelez is eyeing as well. This news was well-received by analysts. Erin Lash, director of consumer equity research at Morningstar said, “These categories are core to Mondelez, boasting attractive growth prospects, with annual sales growing in the mid-single digits, outpacing the low-single-digit marks that tend to characterize packaged food more broadly.” Given this news, is MDLZ stock one to buy?
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.