In this article we present the list of 10 Best Food Stocks to Buy Now. Click to skip ahead and see the 5 Best Food Stocks to Buy Now.
The Hershey Company (NYSE:HSY), Mondelez International, Inc. (NASDAQ:MDLZ), and PepsiCo, Inc. (NASDAQ:PEP) are a few of the food stocks that hedge funds are investing billions of dollars into.
Food stocks are among the safest havens for investors during economic downturns like the one we’re experiencing, as they are the most essential consumer staple there is. No matter how much people are struggling financially, they have to buy food to eat.
That’s been borne out during the current inflationary period, as food sales volumes have been essentially flat despite food prices skyrocketing by more than 10% year-to-date. In the United States, inflation jumped by 9.1% year-over-year in June, with the food index rising by 1% month-over-month. That followed a 1.2% escalation in food prices during May.
In Canada, food prices have experienced the fourth-highest level of inflation among product groupings tracked by Statistics Canada, rising by 9.8% year-over-year through August. That trailed only the transportation, energy, and nondurable goods categories in terms of yearly inflation.
That sales volumes are flat even as prices have shot up during a challenging economic environment highlights not only the obvious necessity of food in our daily lives, but also some of the innovations and initiatives that are spurring global food sales. Among them is the shift to healthier and more natural meals, snacks and ingredients, which carry a premium price tag. The healthy snacks category has enjoyed close to 20% sales growth over the past two years.
Another trend that is benefiting some of the packaged goods and snack food companies on this list is the consumer shift from eating full meals to so-called grazing instead, otherwise known as snacking or eating quick ready-made products. With consumers trying to rein in their grocery bills, preparing costlier full-scale meals and making trips to the restaurant are being bypassed in favor of quicker and cheaper alternatives.
A quick look at stock performance shows the divergent paths that restaurant stocks and food stocks are on, as the AdvisorShares Restaurant ETF has sank by 22% this year, while the Invesco Dynamic Food & Beverage ETF (with the great PBJ ticker) is down by just 4.5%, greatly outperforming the broader market.
With that in mind, let’s take a look at the best food stocks to invest in now according to a collection of some of the savviest investors on the planet.
Our Methodology
The following food stocks are ranked based on hedge fund sentiment. We follow a select group of hedge funds because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q2 2022 reporting period.
10 Best Food Stocks to Buy Now
10. SpartanNash Company (NASDAQ:SPTN)
Number of Hedge Fund Shareholders: 13
The Hershey Company (NYSE:HSY), Mondelez International, Inc. (NASDAQ:MDLZ), and PepsiCo, Inc. (NASDAQ:PEP) are some of the best food stocks to buy now. Another lesser known name worth looking into according to the smart money is SpartanNash Company (NASDAQ:SPTN), which has been one of the better performing stocks on the market over the last year, posting 32% gains.
SpartanNash Company (NASDAQ:SPTN) operates more than 145 of its own grocery stores in addition to supplying groceries to more than 2,100 other locations across the U.S. The company is also a major supplier of goods to military commissaries. SpartanNash expects to achieve $10 billion in revenue by its 2025 fiscal year, along with more than $300 million in adjusted EBITDA.
Jim Simons’ Renaissance Technologies owns the largest position in SpartanNash Company (NASDAQ:SPTN) among the hedge funds tracked by Insider Monkey’s database, holding 1.25 million shares as of June 30.
9. United Natural Foods, Inc. (NYSE:UNFI)
Number of Hedge Fund Shareholders: 20
United Natural Foods, Inc. (NYSE:UNFI) provides over 100,000 natural, organic and specialty food products, in addition to non-food products. Among its goods are private label brands, nutritional supplements, produce, nuts and seeds, and snack products. The company primarily sells to retailers and grocery stores in the United States and Canada.
United Natural Foods, Inc. (NYSE:UNFI) shares are down 27% this year, including by 25% since late August. Supply chain issues and rising costs hit the company’s bottom line in the company’s fiscal Q4, as earnings fell to $0.63 per share from $0.69 a year earlier. United Natural Foods has also been impacted by labor shortages this year, which have weighed on sales. Revenue rose by 7.9% to $7.27 billion in the latest quarter.
Israel Englander’s Millennium Management added several food stocks to its 13F portfolio during Q2, including United Natural Foods, Inc. (NYSE:UNFI). The billionaire money manager’s firm bought 543,553 shares of UNFI during the quarter, building the second-largest position in the stock among the funds tracked by Insider Monkey.
8. Sysco Corporation (NYSE:SYY)
Number of Hedge Fund Shareholders: 32
Sysco Corporation (NYSE:SYY) is a food distributor which primarily supplies to restaurants and other food-away-from-home businesses like hospitals, schools, and hotels. The company distributes everything from frozen foods and meat, to fresh produce and dairy products.
After being up for most of the year, Sysco Corporation (NYSE:SYY) shares are now down 9% in 2022, having fallen by 16% since late August. Sysco’s fiscal Q4 sales rose by 17.5% to $19 billion are were up 22.5% against the same period pre-pandemic. Net earnings soared by 237.5% year-over-year to $510 million. Stephens has an ‘Overweight’ rating and $90 price target on SYY and believes the company is well positioned to outgrow the broader industry.
Hedge fund ownership of Sysco Corporation (NYSE:SYY) has ticked by over each of the past two quarters, but remains down by 26% since the first quarter of 2021. Nelson Peltz, Donald Yacktman, and Ray Dalio are among the prominent investors with notable ownership stakes in SYY.
7. Darling Ingredients Inc. (NYSE:DAR)
Number of Hedge Fund Shareholders: 34
Darling Ingredients Inc. (NYSE:DAR) produces natural ingredients from bio-nutrients which are then sold to the food and pet food industries, as well as the pharmaceutical, industrial, and fertilizer markets. The company controls 15% of the world’s waste fats and greases production and has a burgeoning renewable diesel business that is expected to bolster the company’s free cash flow next year.
Hedge fund ownership of Darling Ingredients Inc. (NYSE:DAR) has more than doubled since the end of 2019, but is slightly off the all-time highs for the stock set in the middle of 2021. Andrew Byington’s Appian Way Asset Management and Scott Bessent’s Key Square Capital Management each built notable stakes in DAR during Q2, with their 13F portfolios having 4.39% and 3.25% exposure to the stock respectively.
The Aristotle Capital Management Focus Growth Fund laid out some of the reasons for Darling Ingredients Inc. (NYSE:DAR) strong first quarter performance in the fund’s Q1 2022 investor letter:
“Darling posted a strong recovery in the first quarter, rising on higher Diesel prices and strong demand for proteins and feedstocks. Furthermore, the Company continues to expand production in its Diamond Green Diesel (DGD) joint venture with Valero. Cash flows are expected to grow meaningfully next year, as the DGD 3 plant is expected to come online in Port Arthur Texas in the first half of 2023, bringing DGD total renewable diesel production capacity up to 1.2 billion gallons per year.”
6. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Shareholders: 35
Closing out the first half of the list is General Mills, Inc. (NYSE:GIS), the maker of some of the world’s most recognizable food brands, including Cheerios, Betty Crocker, Yoplait, Nature Valley, and Old El Paso.
General Mills, Inc. (NYSE:GIS) grew net sales by 3.9% year-over-year during its fiscal Q1, despite divesting several assets during the quarter, including its Helper and Suddenly Salad brands. Net sales grew by 8.9% when excluding those divestitures. Net sales of organic goods performed even better, growing by 10%. General Mills’ shares currently yield 2.82%, which is well supported by the company’s strong adjusted earnings, which grew by 11.2% year-over-year to $1.11 per diluted share in fiscal Q1.
Hedge fund ownership of General Mills, Inc. (NYSE:GIS) has remained steady for nearly three years. Several existing shareholders of the company were buying up more GIS shares during Q2, including Ray Dalio’s Bridgewater Associates and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Check out the second half of this article by clicking the link below to see where The Hershey Company (NYSE:HSY), Mondelez International, Inc. (NASDAQ:MDLZ), and PepsiCo, Inc. (NASDAQ:PEP) rank among top hedge funds.
Click to continue reading and see the 5 Best Food Stocks to Buy Now.
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Disclosure: None. 10 Best Food Stocks to Buy Now is originally published at Insider Monkey.