In this article, we discuss the 12 best food stocks to buy now.
The global food market generated over $8.27 trillion in sales in 2021, an increase of more than $500 billion from the previous year. According to the Statista Consumer Outlook, global food sales will continue to rise over the next few years and will reach over $11.1 trillion in 2027. At a growth rate of 9.7%, the size of the global food and beverage industry is predicted to increase from $5.8 trillion in 2021 to $6.4 trillion in 2022. The market for food and beverages is anticipated to reach $8.9 trillion in 2026, growing at a compound annual growth rate of 8.7%. The great majority of retail food and beverage sales are made at supermarkets and grocery stores, and their market share appears to be increasing. Grocery stores and supermarkets held close to 86 percent of the market in 2020. Convenience stores and specialist food retailers are both losing market share. Convenience stores were struck particularly hard at the start of the COVID-19 pandemic as customers reduced the number of shopping visits they made and more frequently shopped at bigger stores with delivery and pickup options.
Some of the best food stocks to buy include Performance Food Group Company (NYSE:PFGC), Starbucks Corporation (NASDAQ:SBUX), and The Hershey Company (NYSE:HSY).
Photo by Kenny Eliason on Unsplash
Our Methodology
We selected the following food stocks based on optimistic analyst ratings, strong hedge fund sentiment, and future growth potential. We have arranged the list according to the hedge fund sentiment around the securities, which was assessed from Insider Monkey’s Q2 2022 database of 895 elite hedge funds.
Best Food Stocks to Buy Now
12. Kellogg Company (NYSE:K)
Number of Hedge Fund Holders: 25
Kellogg Company (NYSE:K) is an American multinational food manufacturing company. The company was founded in 1906 and is based in Battle Creek, Michigan. Kellogg Company dividend yield on October 4 stood at 3.32%, and the company has an 18-year history of consistent dividend growth. On July 29, Kellogg Company declared a quarterly dividend of $0.59 per share, which was $0.01 above the previous. The dividend was paid on September 15, to shareholders of record on September 1. Kellogg Company has a payout ratio of 55.24% and has gained 11.21% value year to date, as of October 4, 2022.
On August 8, Nik Modi, an analyst at RBC Capital, raised his price target for Kellogg Company from $66 to $70 while maintaining a Sector Perform rating on the stock. According to the analyst’s research note to investors, the company’s Q2 earnings beat and raise underlined that its snacks business is “strong globally” and the U.S. cereal situation is improving faster than expected. Kellogg Company management raised its 2022 guidance in light of its strong first-half performance, underlying trends, and confidence in its plans for the second half of 2022. As opposed to the approximately 4% rise previously anticipated, organic net sales growth in 2022 is now projected to increase by 7-8%.
Among the hedge funds tracked by Insider Monkey, Kellogg Company was found in the public stock portfolios of 25 funds at the end of June 2022, up from 22 funds in the earlier quarter. Jim Simons’ Renaissance Technologies is a significant position holder in the company, with 2.6 million shares worth more than $188 million.
11. Post Holdings, Inc. (NYSE:POST)
Number of Hedge Fund Holders: 26
Post Holdings, Inc. (NYSE:POST) was founded in 1895 and is located in Saint Louis, Missouri. Post Holdings, Inc. operates as a consumer packaged goods holding company in the United States and internationally. On September 6, Post Holdings, Inc. board of directors granted a new $300 million share repurchase authorization, with share purchases under the new authorization starting from September 3.
According to Insider Monkey’s Q2 2022 database, 26 hedge funds were bullish on Post Holdings, Inc., down from 36 funds in the preceding quarter. William Duhamel’s Route One Investment Company is a leading stakeholder of the company as of the end of Q2, with 7 million shares worth $576 million.
In the second quarter investor letter, Diamond Hill Capital Management discussed Post Holdings, Inc.. Here is what the fund said:
“On an individual holdings’ basis, top contributors to return in Q2 included Post Holdings, Inc., UFP Technologies (UFPT) and First Interstate BancSystem (FIBK). Diversified food company Post Holdings is benefiting from solid organic revenue growth and a recovery in its foodservice business. In general, its management has been a good allocator of capital, creating value while moving away from its legacy cereal business toward faster growing segments like nutrition products.”
10. Campbell Soup Company (NYSE:CPB)
Number of Hedge Fund Holders: 27
The business was established in 1869 and is based in Camden, New Jersey. Together with its affiliates, Campbell Soup Company (NYSE:CPB) produces and sells food and beverage products both in the U.S. and abroad. As of October 3, 2022, Campbell Soup Company has gained 12.7% over the past twelve months, has a forward dividend yield of 3.14%, and boasts an annual dividend payout ratio of 52.11%.
The analyst and investor sentiment around Campbell Soup Company is positive. Insider Monkey was able to identify 27 hedge funds that were bullish on Campbell Soup Company at the end of the second quarter of 2022. The total stakes of these funds were valued at $325.372 million, up from $322.849 million in the prior quarter with 22 positions.
09. Conagra Brands, Inc. (NYSE:CAG)
Number of Hedge Fund Holders: 30
Based in Chicago, Illinois, Conagra Brands, Inc. (NYSE:CAG) was established in 1861. Conagra Brands, Inc. and its subsidiaries run a consumer packaged products food business in North America. The business raised its quarterly dividend by 5.6% to $0.33 per share on July 22. This was the third year in a row of dividend growth for Conagra Brands, Inc.. The stock’s dividend yield was 3.83% as of October 3.
The number of hedge funds tracked by Insider Monkey owning positions in Conagra Brands, Inc. stood at 30 in Q2 2022, up from 22 in the previous quarter. The stakes owned by these hedge funds have a consolidated value of over $603.4 million. Ken Griffin’s Citadel Investment Group holds the leading stake in Conagra Brands, Inc., with 4.4 million shares worth $153 million.
Along with Performance Food Group Company, Starbucks Corporation, and The Hershey Company, Conagra Brands, Inc. is one of the best food stocks to buy.
08. Sysco Corporation (NYSE:SYY)
Number of Hedge Fund Holders: 32
Sysco Corporation (NYSE:SYY) was established in 1969 and is based in Houston, Texas. Through its subsidiaries, Sysco Corporation participates in the marketing and distribution of a wide range of food and associated items, particularly for the food-service or food-away-from-home sector in the United States, Canada, the United Kingdom, France, and worldwide.
On August 9, Sysco Corporation announced non-GAAP EPS of $1.15 on revenue of $19 billion, exceeding analysts’ predictions by $0.04 and $710 million, respectively, for the fourth quarter of its fiscal year 2022. The yearly dividend paid by Sysco Corporation is now $1.96 per share, translating into a forward annual dividend yield of over 2.77% based on the stock’s most recent closing price.
On September 22, Joshua Long, a Stephens analyst, began covering Sysco Corporation with an Overweight rating and a $90 price target. Long informs investors that he thinks Sysco’s continuous investments in its brand, culture, inventory, and technological tools position it favorably to grow faster than the industry as a whole.
At the end of Q2, 32 hedge funds tracked by Insider Monkey owned stakes in Sysco Corporation, up from 31 in the previous quarter. The collective value of these stakes is over $1.5 billion. Trian Partners owned the largest stake in the company in Q2, worth $744.8 million.
07. The J. M. Smucker Company (NYSE:SJM)
Number of Hedge Fund Holders: 35
The J. M. Smucker Company (NYSE:SJM) was established in 1897, with its main office located in Orrville, Ohio. The J. M. Smucker Company produces and sells branded food and beverage items all over the world.
On August 24, Stifel analyst Christopher Growe raised the price target on The J.M. Smucker Company to $148 from $140 and kept a Hold rating on the shares. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in The J.M. Smucker Company, with 1 million shares worth more than $131 million.
Just like Performance Food Group Company, Starbucks Corporation, and The Hershey Company, The J. M. Smucker Company is one of the best food stocks to buy.
06. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 35
Minneapolis, Minnesota serves as the home base for General Mills, Inc. (NYSE:GIS), which was established in 1866. General Mills, Inc. handles worldwide food manufacturing and distribution.
Given its defensive character, General Mills, Inc. is among the top stagflation stocks to purchase right now. General Mills, Inc. has a dividend yield of 2.75%. As of November 1, General Mills, Inc. will pay a quarterly dividend of $0.54. The September 21 beat-and-raise earnings announcement from General Mills, Inc. gave the packaged food industry a lift. Its profit projection, which included an EPS growth of 2% to 5% above an earlier expectation for 0% to 3% growth, stood out particularly.
On September 22, analyst Kenneth Zaslow from BMO Capital raised his price target for General Mills, Inc. from $80 to $85 and maintained a Market Perform rating on the shares. According to Zaslow, General Mills, Inc. should be able to accelerate its growth through its “connected commerce” potential as it continues to establish brands profitably in both the physical and digital worlds.
Here is what Chartwell Investment Partners has to say about General Mills, Inc. in its Q2 2022 investor letter:
“In the Dividend Equity accounts, the three best performers in Q2 includes General Mills (NYSE:GIS, 3.2%), up 12.2%. General Mills benefitted from the combination of being in a very defensive industry as well as demonstrating solid business momentum; margins have been particularly impressive, following price increases.”
05. Performance Food Group Company (NYSE:PFGC)
Number of Hedge Fund Holders: 37
Performance Food Group Company was established in 1885 and is based in Richmond, Virginia. Through its subsidiaries, Performance Food Group Company sells and distributes food and food-related goods in the US.
On September 22, Performance Food Group Company was given initial coverage by Stephens analyst Joshua Long with an Overweight rating and a $60 price target. According to Long, who considers Performance Food Group Company to be in a good position to take advantage of its size and scale to boost operational performance, the company is “a compelling growth story within the foodservice distribution industry.”
Hedge fund sentiment around Performance Food Group Company has increased in the second quarter of 2022, with 37 hedge funds long the stock, compared to 29 in Q1 2022.
Here is what ClearBridge Investments Select Strategy has to say about Performance Food Group Company in its Q4 2021 investor letter:
“Performance Food Group is another example of a quality franchise bought during a depressing period for the foodservice industry that has flexed its balance sheet to make acquisitions of weaker players and continues to consolidate its leading market share.”
04. Albertsons Companies, Inc. (NYSE:ACI)
Number of Hedge Fund Holders: 37
Located in Boise, Idaho, Albertsons Companies, Inc. (NYSE:ACI) was established in 1860. Albertsons Companies, Inc. manages food and drug stores through its subsidiaries, across the United States. Albertsons Companies, Inc. is one of the largest food and drug retailers in the United States, with over 2,200 stores in 34 states across the country under well-known banners, including Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Haggen, and Carrs, among others.
At the end of the second quarter of 2022, 37 of the 895 hedge funds we track had a long position in Albertsons Companies, Inc., down from 39 funds in the previous quarter. Cerberus Capital Management was the largest shareholder on record, with ownership of 152 million shares valued at $3.9 billion.
03. The Hershey Company (NYSE:HSY)
Number of Hedge Fund Holders: 43
Established in 1894, The Hershey Company is based in Hershey, Pennsylvania. The Hershey Company, together with its subsidiaries, produces and sells pantry items and confectionary goods both domestically in the U.S. and abroad. The Hershey Company is the top U.S. confectionery maker and controls around 46% of the domestic chocolate market. Over the past 85 years, the company’s product line has evolved to include 100 brands, including Reese’s, Kit Kat, Kisses, and Ice Breakers. Hershey’s goods are offered in around 80 countries, although only a high-single-digit percentage of sales come from international markets, such as Brazil, India, and Mexico.
The Hershey Company is a strong dividend stock, with 12 years of consistent dividend growth. It has a payout ratio of 44.38% and a forward dividend yield of 1.88%. On September 14, Cowen analyst Brian Holland initiated coverage of The Hershey Company with a Market Perform rating and a $238 price target.
As of June 2022, out of the 895 hedge funds polled by Insider Monkey, 43 had held a stake in The Hershey Company. Jim Simons’s Renaissance Technologies is the largest investor in our database of The Hershey Company. It owns 3.6 million shares that are worth $789 million.
02. The Kroger Co. (NYSE:KR)
Number of Hedge Fund Holders: 49
The Kroger Co. (NYSE:KR) was founded in 1883 and is based in Cincinnati, Ohio. The Kroger Co. operates as a retailer in the United States. The Kroger Co., one of the industry leaders in retail, benefits from economies of scale and strong earnings. The Kroger Co. posted normalized EPS of $0.90 for the second fiscal quarter, exceeding consensus expectations by $0.07. The company’s revenue for the second quarter totaled $34.64 billion, up 9.3% over the same period last year.
On September 13, analyst Krisztina Katai with Deutsche Bank raised his price target for The Kroger Co. from $53 to $54 while maintaining a Hold recommendation on the shares. Hedge fund sentiment around The Kroger Co. has increased in the second quarter of 2022, with 49 hedge funds long the stock, compared to 45 in Q1 2022.
When looking at the institutional investors followed by Insider Monkey at the end of Q2, Berkshire Hathaway managed by Warren Buffett holds the biggest position in The Kroger Co.. Berkshire Hathaway has an over $2 billion position in the stock, comprising 0.82% of its 13F portfolio.
01. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holders: 55
Based in Seattle, Washington, Starbucks Corporation was established in 1971. Starbucks Corporation, together with its subsidiaries, is a global roaster, marketer, and retailer of specialty coffee. At the close of Q2 2022, 55 hedge funds out of the 895 tracked by Insider Monkey were long Starbucks Corporation. The total stakes of these hedge funds amounted to $1.43 billion.
Wall Street analysts see an upside to Starbucks Corporation. On September 22, Joshua Long, a Stephens analyst, began following Starbucks Corporation and gave it an Equal Weight rating and a $91 price target. The analyst writes in a research note that while near-term difficulties in North America and China pose barriers to the company’s traffic and top line, he prefers to remain neutral because of the stock’s long-term investment story. On September 16, Piper Sandler analyst Nicole Miller Regan raised his price target on Starbucks Corporation to $92 from $84 and kept a Neutral rating on the shares.
Here is what Matrix Asset Advisors specifically said about Starbucks Corporation in its Q2 2022 investor letter:
“Starbucks Corporation (NASDAQ:SBUX) is a premiere global coffee brand supported by over 32,600 stores across the world. The firm has a long history of beverage innovation and strong employee/barista relations with the firm paying above-market wages and benefits. Starbucks has a strong balance sheet and finances. The company generates steady and consistent cash flow, selling millions of cups of premium coffee every day. The company’s share price declined in part due to its large business in China which was largely shut down due to Covid restrictions and because of rising commodity and labor costs. We think the shares are attractively priced for a company that should grow 10% plus per year with a dividend yield of 2.6% at our average cost.”
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This article is originally published at Insider Monkey.
