In this article, we will look at the 10 Best Food Stocks To Buy Under $20.
Overview of the Global Food Industry
The food industry plays a significant role in regulating the global economy, affecting agriculture and retail. Food demand is growing with an increase in the world’s population, resulting in changes in consumption patterns. According to The Business Research Company, the global food and beverages market was valued at $6.57 trillion in 2023. It is anticipated to grow at a compound annual growth rate of 5.9% between 2024 and 2028, reaching $8.81 trillion by the end of the forecast period. In 2023, Asia-Pacific was the largest region in the food and beverages market.
Technological advancements are causing significant changes in how companies in food production operate. Innovations such as robotics and AI are streamlining supply chains and improving efficiency. Recent consumer spending trends also highlight a shift towards healthier and functional foods that support overall well-being. For instance, many consumers are now looking for products that satisfy hunger and promote health benefits at the same time, such as weight management and heart health.
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Are Food Prices Expected to Cool Down?
Inflation has simmered down over the past two years, according to CNBC. Although October and November saw a slight stall, prices for items such as cars, energy, and gasoline have all cooled down. However, food prices have continued to outpace inflation, rising by 28% since 2019. According to a 2024 survey by RR Donnelley, grocery price increases have left more than 85% of consumers frustrated and disturbed. More than a third of consumers reported shifting to buying fewer items to save money. Experts believe that trends surrounding higher food prices are likely to persist. CNBC reported that Claudia Sahm, a chief economist at New Century Advisors, was of the view that food prices tend to stay up once they rise. She said:
“The inflation may come back down, so you don’t see the big price increases. But outside of widespread depression, we don’t tend to see prices falling across the board.”
While policy interventions can affect food prices, experts are skeptical of the odds of that happening. CNBC reported that Jason Miller, a professor of supply chain management at Michigan State University, was of the opinion that government policymakers can do nothing about the situation. He said this was not unique to the United States, as the problem has been experienced worldwide. At present, there isn’t much to do except wait and see how things work out in the future.
Another factor behind the looming uncertainty about the future of food prices is the current political climate and its unpredictability. However, tariffs are expected to considerably increase the prices of things, especially food. CNBC reported that Rakeen Mabud, chief economist at Groundwork Collaborative, said the following when talking about the scenario:
“Same thing with mass deportations. We have workers in this country who really prop up our food system, and when you start to really harm that workforce and send them away, that harms our entire economy.”
With these trends in view, let’s look at the 10 best food stocks to buy under $20.
A chef in a professional kitchen demonstrating ways to use the company’s products to cook healthy and functional food.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 20 food stocks with a share price under $20. We then selected the top 10 most popular stocks among elite hedge funds as of Q3 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment. Please note that the share price data is as of February 14, 2025.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Food Stocks To Buy Under $20
10. Arcos Dorados Holdings Inc. (NYSE:ARCO)
Stock Price: $8.39
Number of Hedge Fund Holders: 19
Arcos Dorados Holdings Inc. (NYSE:ARCO) is a McDonald’s franchisee that operates or franchises more than 2,140 McDonald’s-branded restaurants. Its operations are divided into four geographical categories: Brazil, the Carribean, the North Latin America division (NOLAD), and the South Latin America division (SLAD). The company has been experiencing market headwinds that have affected its performance, such as currency fluctuations and changing consumer spending patterns in its key markets. Inflation-induced cost pressures on labor and raw materials have also affected its stock.
However, analysts believe that Arcos Dorados Holdings Inc.’s (NYSE:ARCO) stock provides an entry point. The company holds a competitive market edge due to its restaurant portfolio. More than half of its restaurants are free-standing units, which provide a mix of takeout, drive-thru, and delivery service options and boost restaurant sales.
On October 1, 2024, the company announced that it would exercise its option to renew its Master Franchise Agreement (MFA) with McDonald’s for another 20 years starting in 2025. This agreement has strengthened the company’s strategic footing, which stems from the geographic diversification of its solid restaurant base throughout Latin America.
Brennan Asset Management stated the following regarding Arcos Dorados Holdings Inc. (NYSE:ARCO) in its Q4 2024 investor letter:
“Arcos Dorados Holdings Inc. (NYSE:ARCO): Rough 2024…Shares Substantially Undervalued: ARCO produced solid operating results throughout 2024, but negative currency movements, including a near freefall in the Brazilian Real (over 20 percent decline), drove investors to dump ARCO shares. As we noted in our Q3 letter, ARCO announced that it renewed its master franchise agreement (MFA) with McDonald’s (MCD) at terms that were better than many anticipated. While we won’t rehash the entire ARCO thesis (see our 2023 Q2 and Q3 letters for more color), we continue to believe that ARCO is a unique asset (the license to operate essentially all MCD restaurants from Mexico south) that was turbocharged by COVID’s aftereffects. During and after COVID, a large percentage of restaurants closed and there was rapid adoption of drive-through and delivery sales. ARCO disproportionately benefited, given its larger share of free-standing stores. ARCO has a strong balance sheet (including substantial real-estate value), strong incremental returns on capital and a substantial growth opportunity. Brazil faces macro challenges, and further currency weakness is distinctly possible. That said, ARCO has a history of achieving same[1]store sale growth above inflation rates and Brazil has some of the highest delivery penetration rates and digital adaptation rates in all of LATAM. Furthermore, there is no reason for ARCO not to move its listing from New York to Sao Paulo and greatly neutralize the reporting impact from currency fluctuations. We strongly believe ARCO is mispriced at current levels.”
9. Mission Produce, Inc. (NASDAQ:AVO)
Stock Price: $11.80
Number of Hedge Fund Holders: 19
Mission Produce, Inc. (NASDAQ:AVO) specializes in farming, marketing, packing, and distributing avocados to distributors, food retailers, and produce wholesalers. Its operations are divided into three segments: Marketing and Distribution, International Farming, and Blueberries. Its Blueberries segment manages a farming operation that cultivates blueberry plants in Peru. The Company also provides merchandising and promotional support, hands-on training, and insights into market trends.
It reported a strong fiscal 2024, delivering $1.2 billion in revenue. The company’s cash flow generation painted an optimistic picture, as it delivered a $64.2 million increase in operating cash flow in fiscal 2024 versus fiscal 2023. It also generated $107.8 million in adjusted EBITDA, reflecting the strength of its business model and industry-leading position.
Mission Produce, Inc. (NASDAQ:AVO) has a strong integrated business and can seamlessly transition between regions to maintain a consistent customer supply. This gives it a competitive market edge, allowing it to deliver robust per-unit margins. Mission Produce, Inc. (NASDAQ:AVO) also boasts a comprehensive sourcing network, allowing it to maintain a reliable supply even during disruption. The company takes the ninth spot on our list of the 10 best food stocks to buy under $20.
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