We recently published a list of 12 Best Food Stocks to Buy Under $30. In this article, we are going to take a look at where Hormel Foods Corporation (NYSE:HRL) stands against other best food stocks to buy under $30.
Consumer Defensive Sector: Trends and Outlook
On April 25, Shana Sissel, Founder & CEO of Banrion Capital Mgmt, appeared on CNBC to talk about the struggles in the consumer staple sector and investor caution due to tariffs and “Trump exhaustion.” She said the consumer defensive stocks are going on a downward trend, which makes sense to her, especially if you look at how the market’s momentum flows. The concern about a recession and potential economic downturn might be too aggressive. She opined that she wouldn’t take it as much of a point right now because even if we are going to see any economic slowdown from tariffs, one thing is certain: consumers do not tend to cut back on staples. The sector includes the types of companies and consumer goods that people cannot and will not live without.
However, even in this sector, there are some unusual economic indicators that may reflect signs of an economic recession. This includes the snack indicator, where people tend to cut back on snacks in tough times instead of staple food items and other more essential nutrition types. While this is something to keep in mind about the sector, Sissel said that how the consumer staples are performing reflects the momentum swing we have seen in the market. The outlook is, of course, concerning, as it is necessary to look at how people are thinking about the market conditions and the effects of tariff impacts.
JP Morgan also recently gave a market outlook amid tariffs, saying that the market is very bearish, especially in the macro community. It further said that:
“Most are disregarding the latest trade developments, partly due to ‘Trump exhaustion.’ We observe that many prefer to stay in cash and maintain lower leverage in their books.”
Talking about this outlook, Sissel said that one of the triggers that one must look out for a potential change in sentiment is the fact that there is a contrarian sentiment, where we have seen a lot of investors buying the dip. A whole generation of investors has learned to buy the dip because, most of the time, the market recovers quickly.
She also said that the Trump exhaustion appears to be very real, as continuous policy changes have created uncertainty in the market, especially regarding tariffs. While it looks like things are calming down, investors are going to be cautious about jumping in too quickly because of the continuous policy changes. She thus opined that we might see cash staying on the sideline a little bit longer, which meant that we have not seen enough change to indicate that any market gains we are seeing right now are sustainable.
READ ALSO: Top 11 Small Cap Stocks to Buy with Biggest Upside Potential and 10 Best Stocks That Will Always Grow.
Is The Food Sector a Stable Place to Invest?
We discussed whether consumer staples are a stable area to invest in now, along with what the food sector is looking like right now, in a recently published article on Recession Resistant Investing: 10 Best Grocery Stocks To Buy Now. Here is an excerpt from the article:
On April 24, Bryan Spillane, BofA Securities senior consumer analyst, appeared on CNBC’s ‘The Exchange’ to talk about food stocks and how higher costs are weighing on consumers. He said that the biggest incremental headline right now is that costs are a bigger risk than anticipated going into the recent earnings season. Although there is a lot of focus on revenue risk, costs have taken the lead, and tariff risks are also affecting companies across the consumer staples industry.
Companies are sending marketing messages to consumers saying that they won’t be raising prices, which is something consumers didn’t see during COVID-19. These trends are raising concerns about margin pressures across corporate America. Addressing these questions, Spillane said these companies no longer have the ability to price. If there are incremental costs, whether from tariffs or other sources, they will either come from additional cost-cutting or result in margin pressure. Margin pressure is materializing in some major companies in the consumer staples sector, and it is likely to persist into the next quarter as well.
These trends raise the question of whether consumer staples are an area of stability amid current market volatility and macroeconomic concerns. Spillane said that this is a very similar dynamic to what we have seen in the last month or so, which is that the stocks have held in relatively well, even though earnings estimates have come down.
He further said that we have to be very selective from here onwards. Consumer staple companies that do not have negative earnings revision risks are a decent place to hide amid the current market dynamics. However, he warned that the fundamentals are decelerating for the consumer staple companies. These stocks are likely to remain under pressure if market fundamentals continue the way they are.
Our Methodology
We sifted through stock screeners, financial media reports, and ETFs to compile a list of 40 food stocks under $30 and chose the top 12 with the highest number of hedge fund holders as of Q4 2024. We sourced the hedge fund data from Insider Monkey’s database. The list is presented in ascending order of hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? 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 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
A close-up of a hand cutting fresh turkeys, revealing the perishable products of the company.
Hormel Foods Corporation (NYSE:HRL)
Stock Price: $29.31
Number of Hedge Fund Holders: 31
Hormel Foods Corporation (NYSE:HRL) manufactures and markets branded food products. Its operations are divided into Retail, Foodservice, and International segments. In a report released on April 14, Benjamin Theurer from Barclays maintained a buy rating for the company and set a price target of $36.00.
On April 19, Hormel Foods Corporation (NYSE:HRL) received an upgrade from analyst Peter Galbo from BofA, who moved the company from Underperform to Neutral with a $35 price target, up from $29. The rating upgrade was supported by improved fundamentals in the company’s Jennie-O Turkey segment and its cost-saving program named “Transformation & Modernization.” Hormel Foods Corporation’s (NYSE:HRL) pork business is also performing well, benefiting from stable input costs and strong protein demand, which are bringing a positive light to its operations.
Its fiscal Q1 2025 results also show progress across key priorities, with net sales of $2.99 billion, operating income of $228 million, and organic net sales growing 1%. Hormel Foods Corporation (NYSE:HRL) also saw volume growth and share gains in flagship and rising brands in its retail category, while Foodservice underwent broad-based growth across various categories, especially its premium offerings. These trends reflect confidence in the company’s operations, positioning it on track to deliver its 2025 expectations.
Overall, HRL ranks 5th on our list of the best food stocks to buy under $30. While we acknowledge the potential for HRL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than HRL but trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.