In this article, we will look at the 10 Best Packaged Food Stocks to Buy Now.
The American Packaged Food Industry
According to a report by Grand View Research, the US packaged food market had a size of $1.03 trillion in 2021. It is expected to grow at a compound annual growth rate (CAGR) of 4.8% between 2022 and 2030. The primary growth drivers for the industry include the rising consumer inclination for convenience coupled with consumers’ hectic lives and work schedules. In addition, the rise in e-commerce sales in the US is another significant factor supporting the sale of packaged food nationwide. Growing innovation in plant-based products, food packaging, healthy ingredients, and bold flavors is expected to continue driving this growth in the United States in the coming years.
READ ALSO: 14 Best Farmland and Agriculture Stocks Buy Now and 10 Best Consumer Staples Stocks to Buy According to Analysts.
Are Consumer Staples a Safe Haven Amid Market Uncertainty?
On April 8, BofA Securities analysts Bryan D. Spillane, Lisa K. Lewandowski, and Peter T. Galbo released their research findings on the consumer staples industry and their expected performance in case of a potential recession. The analysts iterated that in a majority of recent recessions, consumer staples have historically outperformed the S&P 500 as a sector. This trend points towards a defensive edge for the sector. However, the analysts also cautioned that current market conditions, including weak volume growth and lingering high prices, should be considered, as they may affect the sector’s resilience in a future downturn. Despite these concerns, consumer staples make up an appealing sector for investors and experts due to their limited exposure to the recently imposed tariffs, potentially helping sustain valuation multiples.
During recessions, the stock prices in the consumer staples sector are typically affected by earnings per share (EPS) instead of sales growth. Yahoo! Finance reported that sector analysis highlights forward EPS accounting for more than 90% of stock price movement across central subsectors, including Packaged Food, Beverages, Household and Personal Care, and Tobacco. The analysts also opined that these trends reflect the significance of earnings strength when determining stock performance in volatile and uncertain economic conditions.
Yahoo! Finance further reported that the top-performing stocks in the consumer staples sector are likely to share three common traits. These include solid balance sheets with the potential to sustain share buybacks to boost EPS, profit flexibility to offset increasing costs and revenue pressure, and a strong manufacturing presence in the US to constrain tariff-related inflation.
With these trends in view, let’s look at the 10 best packaged food stocks to buy now.
A busy supermarket with shelves full of packaged foods.
Our Methodology
We sifted through stock screeners, financial media reports, and ETFs to compile a list of 30 packaged food stocks and chose the top 10 most popular among hedge funds as of Q4 2024. The list is ordered in ascending order of hedge fund sentiment. We sourced the hedge fund sentiment data from Insider Monkey’s database.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Best Packaged Food Stocks to Buy Now
10. The Hershey Company (NYSE:HSY)
Number of Hedge Fund Holders: 38
The Hershey Company (NYSE:HSY) manufactures and markets chocolate, sweets, mints, and confectionary items. It operates through the North America Confectionery, North America Salty Snacks, and International segments. Its brand portfolio includes Hershey’s, Reese’s, and Kisses.
While the cocoa shortage is affecting the company’s operations, its revenue for 2024 came up to $11.2 billion, a growth of less than 1% from year-ago levels. The fact that the company managed to grow its revenue amid the cocoa shortage reflects the power of its brand and the high demand for its chocolate. The Hershey Company (NYSE:HSY) has also grown its divided for 15 consecutive years, proving to be a reliable dividend stock. Its average yearly dividend growth over the past decade comes up to a notable 10%.
The company recently announced the strategic acquisition of LesserEvil, known for its better-for-you snacks. The acquisition aligns with The Hershey Company’s (NYSE:HSY) plans to diversify its snacking portfolio and expand its presence in the salty snacks market. The company ranks tenth on our list of the best packaged food stocks to buy now.
9. Freshpet, Inc. (NASDAQ:FRPT)
Number of Hedge Fund Holders: 40
Freshpet, Inc. (NASDAQ:FRPT) manufactures, markets, and distributes packaged food and treats for pets. Its products include a blend of vegetables, fresh meat, and fruits farmed locally. The company’s products include Deli Fresh Grain Free Chicken Recipe for Dogs, Ocean Whitefish Recipe for Cats, Joy Turkey and Apple Bites Treats, Nature’s Fresh Grain Free Chicken Recipe for Cats, and more.
The company’s fiscal Q4 2024 results showed the largest household penetration gains, adding around 2 million households. 800,000 of those were heavy and super heavy users. Freshpet, Inc. (NASDAQ:FRPT) also added new distribution with around 1,300 new stores and approximately 900 second and third fridges for a total of nearly 2,300 new fridges.
Analysts are bullish on the stock as it offers a modern take on healthy food items for animals and boasts a solid customer base, shedding positive light on its future. Its median price target of $82.88 implies an upside of 71.94% from current levels.
On April 8, Bank of America Securities analyst Bryan Spillane reiterated a Buy rating on Freshpet, Inc. (NASDAQ:FRPT) and set a price target of $87.00. Jefferies analyst Kaumil Gajrawala also reiterated a Buy rating on the company on April 7. Freshpet, Inc. (NASDAQ:FRPT) takes the ninth spot on our list of the top packaged food stocks to invest in.