In this article, we discuss the 11 best food stocks to buy now.
According to a report published by The Food and Agriculture Organization (FAO), the rise in food prices reached a 10-year high this October, as the food price index averaged 133.2 points, up from 129.2 points in September. This hike in prices was seen as manufacturers faced higher costs of labor and transportation. The producer-price index gained 0.6% in October, and rose 8.6% in the past year, as reported by CNN. Moreover, the low food production due to the weather uncertainties, which is fueled by climate change, has also increased demand, resulting in higher prices. Due to this, leading food companies also increased their prices to cover the input costs, providing lucrative opportunities to investors.
According to investors and analysts, food stocks can offer good investment opportunities as they diversify the portfolio. Food processing stocks are especially gaining ground among investors as they are not much influenced by the changing seasons. In Q3, the U.S. Food Processing Industry returned 5.97%, up from 5.48% in the previous quarter. Some of the notable food stocks popular among hedge funds include PepsiCo, Inc. (NASDAQ:PEP), Mondelez International, Inc. (NASDAQ:MDLZ), General Mills, Inc. (NYSE:GIS), and The Kraft Heinz Company (NASDAQ:KHC).
Our Methodology:
We picked some of the most popular food stocks among the 873 funds we tracked for the second quarter of 2021. Given the current inflationary environment and uncertainties, we preferred the stocks that pay dividends and have long-term growth potential.
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Best Food Stocks To Buy Now
11. Unilever PLC (NYSE:UL)
Number of Hedge Fund Holders: 19
As of Q2, 19 hedge funds tracked by Insider Monkey reported owning stakes in Unilever PLC (NYSE:UL), compared with 20 in the previous quarter. The total value of these stakes is over $844.2 million, up from $826.8 million in the previous quarter.
Unilever PLC reported its earnings for the first half of 2021 on July 21. The company posted an EPS of €1.33, beating the consensus by €0.08.
On November 3, Unilever PLC announced its quarterly dividend at €0.493 per share. The stock’s current dividend yield stands at 3.62%. Recently, Bernstein upgraded Unilever PLC to Market Perform, highlighting the company’s improving pipeline.
Fiduciary Management mentioned Unilever PLC in its Q2 2021 investor letter. Here is what the firm has to say:
“New opportunities… when, where, and why? As disciplined investors, we find ourselves leaning into the wind time and again, and 2021 has been no different. Given the weakness in emerging markets, companies with significant revenue in emerging markets provided a handful of interesting opportunities. For example, we added to our position in Unilever PLC, a blue‐chip consumer staple. The company’s large emerging market exposure (over 50% of revenue), which, historically, had been viewed positively by the market due to better long‐term growth prospects, has weighed on the stock more recently. Growth is expected to rebound as these geographies recover, and the stock trades at a meaningful discount to its peers.”
10. Celsius Holdings, Inc. (NASDAQ:CELH)
Number of Hedge Fund Holders: 20
Celsius Holdings, Inc. (NASDAQ:CELH) hit its all-time low of $3.84 per share in April 2020 due to the Covid-19 pandemic but has since bounced back. Celsius Holdings, Inc. is a beverage holding company that provides thermogenic calorie-burning beverages.
In Q3, Celsius Holdings, Inc. reported revenue of $94.9 million, beating the estimates by $19.9 million. The company made it to our list of the best food stocks to buy now as it reported a 157% growth in sales, driven by optimization and the opening of new stores. Recently, B. Riley lifted its price target on Celsius Holdings, Inc. to $130, while reiterating a Buy rating on the shares.
At the end of Q2 2021, 20 hedge funds tracked by Insider Monkey were bullish on Celsius Holdings, Inc., with stakes valued at $232.8 million. In the previous quarter, 15 hedge funds had stakes in the company, highlighting a positive hedge fund sentiment.
Like PepsiCo, Inc., Mondelez International, Inc., General Mills, Inc., and The Kraft Heinz Company, analysts and investors are also paying attention to Celsius Holdings, Inc. in the food sector.
9. Hormel Foods Corporation (NYSE:HRL)
Number of Hedge Fund Holders: 24
Hormel Foods Corporation (NYSE:HRL) is a global branded food company. Recently, JPMorgan mentioned the company as one of those in the sector that could increase its operating margin from price increases. The firm upgraded the stock to Neutral, with a $42 price target.
On September 27, Hormel Foods Corporation announced its quarterly dividend of $0.245 per share. The stock’s dividend yield stands at 2.39%. In Q2, the company reported revenue of $2.86 billion, up 20.2% from the prior-year quarter.
Of the 873 hedge funds tracked by Insider Monkey, 24 hedge funds reported owning stakes in Hormel Foods Corporation in Q2, compared with 26 in the previous quarter. The total value of these stakes is over $562.4 million. AQR Capital Management was the company’s leading shareholder in Q2, with shares worth $154.2 million.
8. Conagra Brands, Inc. (NYSE:CAG)
Number of Hedge Fund Holders: 29
Conagra Brands, Inc. (NYSE:CAG) is an American consumer packaged goods company that sells products in supermarkets, restaurants, and foodservice organizations. It remains one of the best food stocks to buy as analysts appreciated the company’s increasing revenue strength.
At the end of Q2, 29 hedge funds tracked by Insider Monkey reported owning stakes in Conagra Brands, Inc., compared with 30 in the previous quarter. These stakes are valued at $576.2 million. JANA Partners is the company’s leading shareholder in Q3, owning over 8 million shares.
Conagra Brands, Inc. announced its Q3 earnings on October 7 and posted an EPS of $0.50, beating the analysts’ expectations by $0.01. This September, Credit Suisse upgraded Conagra Brands, Inc. to Neutral while keeping a $34 price target. The company’s quarterly dividend stands at $0.3125 per share, with a dividend yield of 3.48%.
7. Kellogg Company (NYSE:K)
Number of Hedge Fund Holders: 32
Kellogg Company (NYSE:K), an American multinational food manufacturing company, declared its quarterly dividend on October 29, at $0.58 per share. The stock’s dividend yield stands at 3.72%.
This September, Morgan Stanley assumed its coverage of Kellogg Company with an Equal Weight rating and a $64 price target. The company beat analysts’ expectations in Q3 as it reported revenue of $3.62 billion, versus the estimates of $3.54 billion. Kellogg Company also reported a 5.1% quarter-over-quarter growth in organic sales.
As of Q2, 32 hedge funds in the database of Insider Monkey reported having stakes in Kellogg Company, the same as in the previous quarter. The total value of these stakes is over $482.2 million.
6. Sanderson Farms, Inc. (NASDAQ:SAFM)
Number of Hedge Fund Holders: 33
Sanderson Farms, Inc. (NASDAQ:SAFM) is a poultry processing company and the third-largest producer of poultry in the U.S. Due to the increasing demand for poultry by customers and retail grocery stores, Sanderson Farms, Inc. remains one of the best food stocks to buy now.
Magnetar Capital is the largest shareholder of Sanderson Farms, Inc. in Q3, with shares worth roughly $146 million. Overall in Q2, the company presented a positive hedge fund sentiment, as 33 hedge funds tracked by Insider Monkey were bullish on the stock, up from 18 in the previous quarter.
On September 23, the company’s board declared a quarterly dividend of $0.44 per share. The stock’s current dividend yield stands at 0.92%. This October, Consumer Edge upgraded the stock to Overweight, while keeping a $203 price target.
5. Tyson Foods, Inc. (NYSE:TSN)
Number of Hedge Fund Holders: 33
Tyson Foods, Inc. (NYSE:TSN) is an American food company that is one of the largest producers of chicken, beef, and pork and is also the largest exporter of beef in the country. The stock gained on November 14, after it topped consensus estimates for its fiscal Q4 earnings, making it one of the best food stocks to buy now. Tyson Foods, Inc. posted an EPS of $2.30, beating the estimates by $0.08.
At the end of June, 33 hedge funds tracked by Insider Monkey reported owning stakes in Tyson Foods, Inc., valued at $743.7 million. In the previous quarter, 28 hedge funds had positions in the company, highlighting a positive hedge fund sentiment in Q2.
On November 16, both BMO Capital and Stephens raised their price targets on Tyson Foods, Inc. to $103 and $100, respectively, after the company posted strong quarterly results. The analysts appreciated a 15.4% year-over-year growth in the company’s beef sales in fiscal Q4 2021.
4. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 33
The Kraft Heinz Company reported Q3 earnings on October 27 and posted an EPS of $0.65, beating the estimates by $0.07. The company’s revenue for the quarter stood at $6.32 billion, beating the consensus by $240 million. With a surprising 2% q/q growth in organic sales, The Kraft Heinz Company remains one of the best food stocks to buy now.
Recently, The Kraft Heinz Company announced a quarterly dividend of $0.40 per share. The stock’s dividend yield stands at 4.39%. The company’s dividend payout ratio stands at 55.56%. In September, Morgan Stanley resumed its coverage on The Kraft Heinz Company with an Equal Weight rating and a $37 price target.
At the end of Q2 2021, 33 hedge funds tracked by Insider Monkey reported owning stakes in The Kraft Heinz Company, the same as in the previous quarter. These stakes are valued at over $13.5 billion. Warren Buffett’s Berkshire Hathaway is the largest shareholder of The Kraft Heinz Company in Q3, owning shares worth roughly $12 billion.
3. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 37
General Mills, Inc. is an American multinational food company that sells food and related products through retail stores. As of Q2, Insider Monkey’s data shows that hedge fund interest is increasing in General Mills, Inc. as 37 hedge funds tracked by Insider Monkey remained bullish on the company, up from 31 in the previous quarter. The total worth of these stakes is roughly $745 million.
In fiscal Q1, General Mills, Inc. posted an EPS of $0.99, beating the estimates by $0.10. The company’s revenue for the quarter stood at $4.54 billion, up 4.5% from the prior-year quarter.
Recently, Citigroup lifted its price target on General Mills, Inc. to $70, while upgrading the stock to Buy. The firm’s analyst appreciated the company’s position in the market.
Oakmark Funds mentioned General Mills, Inc. in its Q3 2021 investor letter. Here is what the firm has to say:
“In the 1970s, blackout rules prevented televising NFL home games that weren’t sold out. It was always uncertain whether or not the Minnesota Vikings’ games would be televised. I remember how excited I’d be each week hearing that General Mills had purchased the remaining tickets, allowing the game to be on TV. Some said General Mills did this for its stakeholders—its employees and community—as opposed to maximizing profits for its shareholders. I believe stakeholders and shareholders both benefitted.
Consider the long-term benefits of General Mills being the hero that let us watch those games. It made employees proud of their employer and maybe helped with talent acquisition. The thousands of disadvantaged kids who got to attend NFL games were perhaps more likely to become General Mills customers or employees. And across the state, maybe we were all more likely to buy Betty Crocker cake mix instead of Duncan Hines. While the tickets were purchased in the name of being a good corporate citizen, I believe it was the most effective marketing ever done by General Mills and clearly benefitted the company’s shareholders.
Would Friedman argue against this spending because it reduced profits? Absolutely not. His writing from more than 40 years ago sounds eerily timely: “In the present climate of opinion, with its widespread aversion to ‘capitalism,’ ‘profits,’ the ‘soulless corporation’ and so on, this is one way for a corporation to generate goodwill as a by-product of expenditures that are entirely justified in its own self-interest.”
General Mills accepted lower short-term profits in its pursuit of higher long-term value. And the stakeholders also benefitted. In The Heart of Capitalism, Joly states that “shareholder or stakeholder” tradeoffs are artificial because an “and” solution often exists. “We maximize performance not by choosing between stakeholders, but by embracing all of them. We choose employees and customers and shareholders and the community.” Joly cites examples from his time at Best Buy, including reducing its carbon footprint by installing LED lights throughout the stores. “This helps the environment and helped us save money on our energy consumption. Again, not a zero-sum game.”
2. Mondelez International, Inc. (NASDAQ:MDLZ)
Number of Hedge Fund Holders: 53
Mondelez International, Inc. is an American confectionery and food holding company, based in Chicago, U.S. Mondelez International, Inc. announced its Q3 earnings on November 2. The company posted an EPS of $0.71, beating the estimates by $0.01. Its revenue for the quarter grew by 7.6% from the same period last year, at $7.18 billion.
This September, Morgan Stanley initiated its coverage on Mondelez International, Inc. with an Overweight rating and a $69 price target, as the company expects growth in its long-term organic sales. Moreover, the firm believes that the company has strong pricing power and is leveraged to a post-Covid recovery, which makes it one of the best food stocks to buy now.
At the end of Q2, 53 hedge funds tracked by Insider Monkey reported owning stakes in Mondelez International, Inc., valued at roughly $3 billion. In the previous quarter, 45 hedge funds had stakes in the company, worth $2.8 billion, which highlights a positive hedge fund sentiment in Q2. Ric Dillon’s Diamond Hill Capital is the largest shareholder of Mondelez International, Inc. in Q3, owning roughly 10 million shares.
1. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 66
PepsiCo, Inc. is an American food, beverage, and snack company. Recently, Barclays raised its price target on PepsiCo, Inc. to $168, with an Overweight rating on the shares, after the company posted solid Q3 earnings and provided next year’s outlook.
Recently, PepsiCo, Inc. announced to receive delivery of its first batch of Tesla Semi Trucks by the end of the year as a part of its broader plan to cut transportation emissions. In Q3, the company posted an EPS of $1.79, beating the estimates by $0.06. PepsiCo, Inc. saw a 9% growth in its organic revenue in the third quarter.
Of the 873 hedge funds tracked by Insider Monkey, 66 hedge funds had stakes in PepsiCo, Inc. in Q2, up from 61 in the previous quarter. The total value of these stakes is over $5 billion, compared with $4.8 billion in Q1 2021. Fundsmith LLP is the company’s largest shareholder in Q3, owning shares worth $1.5 billion.
You can also take a look at Top 10 Food Delivery Stocks to Buy in 2021 and 10 Biggest Fast Food Chains in the World
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This article is originally published at Insider Monkey.
