In this article, we will take a look at the 13 best food stocks to buy Now.
The food industry remains in the spotlight as investors flock to stocks that remain resilient in the current inflation storm. Essential food companies are in a situation to relay rising prices to consumers. Food items are usually the last to see decline in consumer spending. However, not all companies in the food sector are totally safe from the current market dynamics. Cowen’s analyst Robert Moskow recently said that some food companies are in early stages of an upcoming cyclical decline amid weakening elasticity of demand from supply chain normalization, the risk of price discounting, and margin pressures.
However, the analyst said that in the current scenario, he’s tilting towards some top quality food companies that sell “must have” brands. He also likes these companies because of their pricing power. These companies include Mondelez International (NASDAQ:MDLZ), J.M. Smucker (NYSE:SJM), Hershey (NYSE:HSY), Utz Brands (UTZ), and Lamb Weston (LW).
For this article we decided use a broader definition of the food sector and also expanded our scope to the beverage sector. We first listed down all holdings of the First Trust Nasdaq Food & Beverage ETF (FTXG). We then gauged hedge fund sentiment for all holdings of the ETF and then selected 13 stocks with the highest number of hedge fund investors.
Best Food Stocks To Buy Now
13. Keurig Dr Pepper Inc. (NASDAQ:KDP)
Number of Hedge Fund Holders: 40
Keurig Dr Pepper Inc. (NASDAQ:KDP) ranks 13th in our list of the best food stocks to buy now according to hedge funds. As of the end of the second quarter of 2023, 40 hedge funds in Insider Monkey’s database of 910 hedge funds had stakes in Keurig Dr Pepper Inc.. The biggest stakeholder of the company during this period was Ken Griffin’s Citadel Investment Group which owns a $188 million stake in the company.
Earlier in September the company upped its quarterly dividend by a whopping 7.5%.
12. Molson Coors Beverage Company (NYSE:TAP)
Number of Hedge Fund Holders: 40
Beverage giant Molson Coors Beverage Company (NYSE:TAP) is one of the best food stocks to buy now according to smart money investors. Insider Monkey’s database of 910 hedge funds shows that 40 hedge funds had stakes in the company as of the end of the second quarter of 2023. The biggest hedge fund stakeholder of the firm during this period was Ken Griffin’s Citadel Investment Group which owns a $245 million stake in the company.
Molson Coors Beverage Company recently said it would buy bourbon and rye whiskies maker Blue Run Spirits for an undisclosed amount.
11. Celsius Holdings, Inc. (NASDAQ:CELH)
Number of Hedge Fund Holders: 41
Beverage company Celsius Holdings, Inc. (NASDAQ:CELH) is one of the best food and beverage stocks to buy according to hedge funds. Insider Monkey’s database of 910 hedge funds shows that 41 hedge funds had stakes in the firm as of the end of the second quarter. The most significant stake held in Celsius Holdings, Inc. belonged to Paul Marshall and Ian Wace’s Marshall Wace LLP which owns a $199 million stake in the company.
Celsius Holdings, Inc. shares jumped in August after the company posted spectacular second quarter results. Revenue in the quarter jumped about 11% year over year to $326 million.
Carillon Tower Advisers made the following comment about Celsius Holdings, Inc. in its Q3 2022 investor letter:
“Celsius Holdings, Inc. (NASDAQ:CELH) develops, markets, sells, and distributes functional fitness and lifestyle beverages. The company’s shares outperformed in the period as it was announced that a major global soft drink company would take a minority ownership stake in the company in a deal that also would involve a strategic distribution agreement. In addition, Celsius reported a strong quarter, and it continues to gain market share in the energy drink category.”
10. The Hershey Company (NYSE:HSY)
Number of Hedge Fund Holders: 43
One of the biggest chocolate makers, Hershey Co (NYSE:HS) is a dividend-paying stock with a yield of over 2%. In July Hershey Co upped its dividend by 15%. The company’s organic sales in the quarter jumped 5% on a constant currency basis. The company also upped its full-year profit guidance.
Out of the 910 hedge funds tracked by Insider Monkey, 43 hedge funds reported owning stakes in the company.
9. The Kroger Co. (NYSE:KR)
Number of Hedge Fund Holders: 43
One of the biggest retailers in the US, The Kroger Co. (NYSE:KR) has upped its dividend for about 17 years now. Out of the 910 hedge funds tracked by Insider Monkey, 43 hedge funds had stakes in The Kroger Co.. The biggest stakeholder of the firm during this period was Warren Buffett’s Berkshire Hathaway which owns a $2.4 billion stake in the company.
The company’s management talked about the rising inflation and its effects on consumers and business in a latest earnings call:
“… This inflation is occurring at a greater rate in 2023 than we originally anticipated and our customers are continuing to feel the effects of macroeconomic conditions. For these reasons, we believe the remainder of the year will continue to present challenges to navigate and we expect identical sales without fuel will now be at the low end of our full year guidance range of 1% to 2%. We would expect identical sales without fuel to be slightly negative in the second half of the year. As a reminder, this guidance reflects the effect of Express Scripts, which is reducing our reported identical sales without fuel by approximately 150 basis points in 2023.
Despite slowing sales, as demonstrated in our year-to-date results, we believe we have the flexibility within our model to navigate the impact of this environment through effective cost management and growing alternative profits. We are maintaining our adjusted net earnings per diluted share and adjusted net operating profit guidance and would expect adjusted EPS to be in line with the prior year in the third quarter and slightly ahead of the prior year in the fourth quarter before including the approximately $0.15 benefit at the 53rd week. Kroger delivered another quarter of consistent results built on the foundation of record growth over the past three years. While macro uncertainties remain, we are confident the strength and resiliency of our value creation model will allow us to continue to deliver attractive and sustainable total shareholder returns.”
Read the full earnings call transcript here.
8. Monster Beverage Corporation (NASDAQ:MNST)
Number of Hedge Fund Holders: 44
Monster Beverage Corp (NASDAQ:MNST) shares have gained about 4% year to date through September 30. Insider Monkey’s database of 910 hedge funds shows that 44 hedge funds had stakes in the company. The most significant stakeholder of the company was Neal C. Bradsher’s Broadwood Capital which owns a $535 million stake in the company.
Piper Sandler in August upgraded MNST to Overweight from Neutral and increased its price target to $63 from $60. Piper Sandler said the following about the stock in a note:
“When we initiated coverage roughly two months ago, valuation was our only real hesitation, and we now consider the risk/reward to be more attractive. Its 2Q23 results were below expectations, but there is nothing concerning about the business or its near and long-term momentum.”
7. Lamb Weston Holdings, Inc. (NYSE:LW)
Number of Hedge Fund Holders: 47
Frozen fries company Lamb Weston Holdings Inc (NYSE:LW) ranks 7th in our list of the best food stocks to buy now. Insider Monkey’s database of 910 hedge funds shows that 47 hedge funds were long Lamb Weston Holdings Inc as of the end of the second quarter of 2023. The most significant stakeholder of the company was Sharlyn C. Heslam’s Stockbridge Partners which owns a $345 million stake in the company.
Hedgeye added Lamb Weston Holdings Inc as a long idea after the company’s fiscal Q4 results announced in July. Hedgeye said that french fries are the highest margin restaurant products. The firm said that the pullback in Lamb Weston Holdings Inc shares after the fiscal Q4 results were a buying opportunity.
6. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 48
Consumer foods company General Mills, Inc. (NYSE:GIS) ranks 6th in our list of the best food stocks to buy now according to hedge funds. General Mills recently posted fiscal Q1’2024 results. Higher prices in the period offset lower volumes. Revenue in the period jumped 4% year-over-year to $4.9 billion.
General Mills, Inc. management talked about industry trends and the factors driving food-at-home demand during the company’s latest earnings call:
“What has changed is that we’ve seen a reversion back to people being mobile and more education and healthcare and hotels and lodging and that sort of thing, which I think is logical. In fact, if you look at the movement data through airports, it’s up year-over-year. Now it’s only back to pre-pandemic levels, but it’s quite a bit year-over-year. So that would kind of corroborate that thinking. So that’s the second reason. And the third is, there’s probably as we’ve seen another kind of recession — we’re at a consumer recessionary period, even though technically we’re not in a recession, consumer behavior trying to economize, and so that may be going into smaller sizes and things like that, which in the very short-term, [detox] (ph) a pantry, but people aren’t eating less, and we don’t anticipate that they will eat less.
In fact, what I would say is, as consumers start to get squeezed, what generally happens is people move more at home. And now the cost of eating out is roughly four times what it is eating at home and so as consumers get more squeezed and as people get into their normal routines in the fall, we would think that at-home eating would probably pick up a little bit. We’ll find out. But that’s what we think and those are the three factors that is very clear to us are driving the current environment.”
Read the full earnings call transcript here.
5. Constellation Brands, Inc. (NYSE:STZ)
Number of Hedge Fund Holders: 48
A total of 48 hedge funds tracked by Insider Monkey had stakes in beer and wine company Constellation Brands, Inc. (NYSE:STZ). The biggest stakeholder of the company was Brandon Haley’s Holocene Advisors which owns a $196 million stake in the company.
4. US Foods Holding Corp. (NYSE:USFD)
Number of Hedge Fund Holders: 52
Insider Monkey’s database of 910 hedge funds shows that 52 hedge funds tracked by Insider Monkey had stakes in US Foods Holding Corp (NYSE:USFD). The most significant stakeholder of the firm was Scott Ferguson’s Sachem Head Capital which owns an $833 million stake in the company.
3. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Number of Hedge Fund Holders: 55
Tacos and burritos chain Chipotle is one of the best food stocks to buy now according to hedge funds. As of the end of the second quarter of 2023, 55 hedge funds had stakes in the company. The biggest stakeholder of the company was Bill Ackman’s Pershing Square which owns a $2 billion stake in the company.
Pershing Square Holdings made the following comment about Chipotle Mexican Grill, Inc. (NYSE:CMG) in its Q2 2023 investor letter:
“Chipotle Mexican Grill, Inc. (NYSE:CMG)’s business strength continued in 2023, driven by the company’s focus on exceptional food and operational excellence. During the second quarter, Chipotle grew same-store sales by 7.4%, or 40% from 2019 levels. Transactions grew 4.4%, a sequential improvement compared to the first quarter, and price increases from 2022 contributed 5.5% offset somewhat by a shift from group to individual orders which was a 2.5% headwind. The negative group to individual impact should shrink in the balance of the year and cease to be a headwind as we enter 2024.
Chipotle’s ongoing traffic momentum is fueled by improving in-restaurant execution and its continued cadence of successful menu innovation. The current limited time offering, chicken al pastor, is ordered in one out of every five transactions. Management plans to launch a new limited time offering later in the third quarter. Unlike most competitors, Chipotle has not yet taken pricing in 2023, thereby further improving its industry-leading value proposition. Management did, however, signal its openness to increasing menu prices later this year if cost inflation persists…” (Click here to read the full text)
2. Mondelez International, Inc. (NASDAQ:MDLZ)
Number of Hedge Fund Holders: 55
Confectionary food and snacks company Mondelez shares have gained about 26% over the past one year. Morgan Stanley recently updated its 2023 Dividend Playbook. The stocks in this portfolio combine yield, growth and stability. MDLZ was one of the picks of Morgan Stanley for this portfolio. Mondelez has upped its dividend consistently for about a decade now.
1. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 61
Coca Cola is one of the top food and beverage stocks to buy according to hedge funds. With six decades of consistent dividend increases and recession-proof business model, Coca Cola has seen a jump in interest from both retail and institutional investors. A total of 61 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in the company as of the end of the second quarter. The biggest stakeholder of the company was Oracle of Omaha Warren Buffett who had a $24 billion stake in the company.
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This article is originally published at Insider Monkey.
