In this article, we will look at the 10 Cheap Food Stocks to Buy According to Hedge Funds.
Consumer Confidence Shows Major Drop
CNBC reported that The Conference Board’s Consumer Confidence Index dropped to 98.3 for February, reflecting a slip of nearly 7% and below the Dow Jones forecast of 102.3. This marked the largest monthly drop the market has seen since August 2021. In addition, The Expectations Index dropped to a 72.9 reading, reflecting a decrease of 9.3 points. The measure has tumbled below the level consistent with recession for the first time since June 2024. These trends show that consumers are becoming increasingly pessimistic about the country’s economic outlook, and this pessimism reached new heights in February due to skepticism surrounding rising inflation and a slowing economy, according to the Conference Board.
Furthermore, the drop in consumer confidence is materializing amid President Trump’s threats of additional tariffs against the US’s trading partners. The US President recently declared that his previously announced tariffs against Mexico and Canada will move forward in March after a postponement of their implementation in February.
CNBC reported that Stephanie Guichard, the board’s senior economist for global indicators, said the following about the emerging situation:
“Views of current labor market conditions weakened. Consumers became pessimistic about future business conditions and less optimistic about future income. Pessimism about future employment prospects worsened and reached a ten-month high.”
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What Could Tariffs and Potentially Rising Inflation Mean for the Food Industry?
Economists and experts opine that the situation is unpredictable and worrisome. Trump’s tariffs may ignite another bubbling of inflation in a scenario where the Federal Reserve is weighing the odds of whether to slash interest rates further or hold steady as experts and policymakers chalk out the effects of the President’s aggressive trade and fiscal policies, as reported by CNBC.
Consumers are reflecting the worries of economists and experts, as the 12-month inflation expectations rose to 6%, up from 5.2% in the last month and considerably higher than the Fed’s steady goal of 2%. CNBC reported that Guichard opined:
“This increase likely reflected a mix of factors, including sticky inflation but also the recent jump in prices of key household staples like eggs and the expected impact of tariffs. There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019. Most notably, comments on the current administration and its policies dominated the responses.”
Treasury Secretary Scott Bessent rang caution bells regarding “sticky” inflation and the potential for slow growth. He attributed the cause to former President Biden’s administration, saying that he fostered an economy too dependent on government spending. He said the government’s plan now is to develop a more diverse economy through deregulation, tax cuts, and tariffs. However, such a scenario is likely to have adverse effects on the food industry. Economists believe that such aggressive policies may drive the cost of food, apparel, toys, and appliances. CNBC reported that Bessent said:
“The previous administration’s over-reliance on excessive government spending and overbearing regulation left us with an economy that may have exhibited some reasonable metrics but ultimately was brittle underneath, and heading for an unstable equilibrium.”
With these trends in view, let’s look at the 10 cheap food stocks to buy according to hedge funds.
A busy restaurant kitchen with a chef and staff rhythmically preparing food for delivery orders.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of food stocks with a forward P/E ratio of less than 15. We then selected the top 10 most popular stocks among elite hedge funds as of Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Cheap Food Stocks to Buy According to Hedge Funds
10. The Campbell’s Company (NYSE:CPB)
Forward P/E: 13.28
Number of Hedge Fund Holders: 30
Formerly known as Campbell Soup Company, The Campbell’s Company (NYSE:CPB) offers affordable food and beverages. Its operations are divided into two divisions: Meals & Beverages and Snacks. Its brand portfolio comprises approximately 16 brands, including Campbell’s, Cape Cod, Chunky, Goldfish, Kettle Brand, Lance, Late July, Pace, Pacific Foods, Pepperidge Farm, and others. The company’s North American Foodservice division offers recipes, food, and tailored solutions for a range of segments, including restaurants, healthcare facilities, specialty coffee shops, lodging, schools, and more.
The Campbell’s Company’s (NYSE:CPB) acquisition of Sovos, the parent company of Rao’s, proved to be a turning point. It has now undertaken a chain of strategic shifts and leadership changes to streamline its operations, increasing confidence in the company’s future. The company reported a 10% growth in net sales in fiscal Q1 2025, reflecting the momentum of the acquisition of Sovos. In addition, it delivered 6% year-over-year growth in adjusted EBIT and an adjusted EPS of $0.89.
However, The Campbell’s Company (NYSE:CPB) is experiencing the effects of a continued dynamic consumer environment and the impact of movements in retail inventory levels, causing organic net sales to drop by 1%. While not every category is recovering at the same pace for the company, management is optimistic about its overall progress, as over 75% of its portfolio is in growing categories, giving it an advantaged position with consumer recovery.
9. Conagra Brands, Inc. (NYSE:CAG)
Forward P/E: 10.93
Number of Hedge Fund Holders: 32
Conagra Brands, Inc. (NYSE:CAG) is a consumer-packaged goods food company that operates in three segments: Grocery & Snacks, Refrigerated & Frozen, and International. Its brand portfolio encompasses Birds Eye, Duncan Hines, Healthy Choice, Marie Callender’s, Reddi-wip, and BOOMCHICKAPOP.
Despite a continued challenging consumer environment, the company witnessed a return to growth in fiscal Q2 2025 due to its strategic investments. Its organic net sales were $3.2 billion in fiscal Q2 2025, up 30 basis points over the prior year.
With consumer lifestyles continuing to evolve, a strong demand for convenient, high-quality frozen meals and snacks is expected. The company’s strong position in frozen foods and snacks thus presents significant opportunities for growth. Conagra Brands, Inc. (NYSE:CAG) is expected to capitalize on this trend as it focuses on product innovation, mainly in areas including healthier options, plant-based alternatives, and premium offerings. Conagra Brands, Inc. (NYSE:CAG) has a strong and consistently improving demand. While it has experienced recent challenges, its infrastructure and strategic partnerships position it for long-term success.
8. Ingredion Incorporated (NYSE:INGR)
Forward P/E: 11.92
Number of Hedge Fund Holders: 36
Ingredion Incorporated (NYSE:INGR) is a global ingredients solutions provider that transforms fruits, vegetables, grains, and other plant-based materials into value-added ingredient solutions for several markets, including food, beverage, animal nutrition, brewing, and industrial markets. The company’s products are primarily derived from the processing of corn and other starch-based materials, including rice, potato, and tapioca. It operates through four segments: North America, South America, Asia-Pacific, and Europe, Middle East and Africa (EMEA).
Ingredion Incorporated (NYSE:INGR) reported a 6% and 9% dip in its net sales in fiscal Q4 2024 and full year 2024, respectively. This drop was attributed to factors such as price mix challenges, foreign exchange impacts, and a decrease in revenue due to the sale of its South Korean business.
However, the company’s EPS for fiscal Q4 2024 came to $2.63, surpassing analyst estimates and reflecting a 34% growth compared to last year. Adjusted EPS for the full year 2024 stood at $10.65, compared to $9.42 in 2023. This growth was attributed to continued sales volume momentum in the Texture & Healthful Solutions and Food & Industrial Ingredients segments. In 2024, Ingredion Incorporated (NYSE:INGR) reiterated its commitment to robust shareholder returns through $210 million in dividends and $216 million of share repurchases. It is determined to continue returning value to shareholders in the future.
7. The J.M. Smucker Company (NYSE:SJM)
Forward P/E: 11.38
Number of Hedge Fund Holders: 37
The J.M. Smucker Company (NYSE:SJM) manufactures and markets branded food and beverage products under a portfolio of brands. Its operations are divided into four segments: US Retail Coffee, US Retail Frozen Handheld and Spreads, and US Retail Pet Foods and Sweet Baked Snacks.
Over the past five quarters, The J.M. Smucker Company (NYSE:SJM) has maintained strong trends and attained strong industry standing in the frozen foods and snacks segment. It has driven consistent top-line growth through advertising, trade, and innovation investments. In addition, its solid financial position is further supported by free cash flow conversion surpassing 100% due to efficient working capital management, particularly in inventory. It currently offers a quarterly dividend of $1.08 per share and has a dividend yield of 3.89% as of February 24.
The J. M. Smucker Company (NYSE:SJM) also has a history of transforming modest investments into significant revenue streams. For instance, its 1998 purchase of Uncrustables for $1 million evolved into a mega brand generating nearly $1 billion in annual revenue. The company ranks 7th on our list of the 10 cheap food stocks to buy according to hedge funds.
6. General Mills, Inc. (NYSE:GIS)
Forward P/E: 14.11
Number of Hedge Fund Holders: 49
General Mills, Inc. (NYSE:GIS) manufactures and markets branded consumer foods. It has more than 100 brands in around 100 countries across six continents. The company’s product offerings include refrigerated and frozen dough, snacks, and more.
The company’s outlook on operating profit and EPS in fiscal 2025 is lower since it increased its investment to boost customer value. Given the uncertain macroeconomic backdrop for consumers, this decision is expected to strengthen the company’s offerings and position it for sustainable growth in fiscal 2026 and beyond.
General Mills, Inc. (NYSE:GIS) strengthened its competitiveness in fiscal Q2 2025, with 56% of its priority business growing or holding pound share and 38% growing or holding dollar share. Both of these reflect significant improvement compared to fiscal Q1 2025 and fiscal year 2024, highlighting its positive momentum. In addition, the company reported revenue of $5.24 billion, a 2% increase from the previous year and $97 million above analysts’ expectations. Operating profit rose to $1.1 billion, marking a 33% jump, further reflecting the company’s positive operations.
General Mills, Inc.’s (NYSE:GIS) long-standing record of deploying cash through capital investments, share repurchases, dividend growth, and M&A ranks it among the best cheap food stocks to buy according to hedge funds.
5. Dollar General Corporation (NYSE:DG)
Forward P/E: 13.68
Number of Hedge Fund Holders: 53
Dollar General (NYSE:DG) is a retailer that offers an elaborate array of merchandise in its stores, including consumables, beverages, seasonal items, and more. Its merchandise collection includes its own private brands and brands from manufacturers.
The company’s primary priority is investing in its business, including its existing store base and organic growth opportunities, such as strategic initiatives and new store expansion. Dollar General (NYSE:DG) has strong growth projections and estimates a 7% increase in cash flow and 11% growth in earnings annually over the coming years.
Through fiscal Q3 2024, the business generated cash flows of $2.2 billion from operations, an increase of 52% due to improvements in Dollar General’s (NYSE:DG) working capital position, mainly through inventory management. Its net sales grew by 5% to $10.2 billion in fiscal Q3 2024. The company raised its market share in both dollars and units in highly consumable and non-consumable product sales during the quarter. Its same-store sales also rose by 1.3%, attributed to 1.1% growth in the average transaction amount, including the average unit retail price per item and the increase in average items per basket.
4. Target Corporation (NYSE:TGT)
Forward P/E: 14.66
Number of Hedge Fund Holders: 56
Target Corporation (NYSE:TGT) is a retail giant operating over 2,000 discount department stores and hypermarkets across the US and Canada. It serves its customers an array of items, including food, everyday essentials, differentiated merchandise at discounted prices, and general merchandise. Its merchandise categories span food and beverages, home furnishing and decor, and others.
Over the past year, the company has increased its operating income steadily while preserving a strong financial foundation. It benefits from strong liquidity, supported by a clean balance sheet free of intangible assets and a robust return on invested capital (ROIC) of 11.5%. In the first nine months of 2024, the company generated $4.07 billion in operating cash flow and held $3.4 billion in cash and cash equivalents by the end of the quarter. Target Corporation (NYSE:TGT) boasts a solid dividend history and a strong financial position, which enabled the company to return $516 million to shareholders through dividends.
In January, the company announced that it is focusing on its commitment to wellness, with plans to introduce more than 2,000 new items across multiple categories, including more than 600 Target exclusives. The company also has a 53-year streak of continuous dividend growth, and offers a quarterly dividend of $1.12 per share with a dividend yield of 3.56%, as of February 24.
3. The Kroger Co. (NYSE:KR)
Forward P/E: 14.71
Number of Hedge Fund Holders: 60
The Kroger Co. (NYSE:KR) is a food and drug retailer that operates supermarkets, fulfillment centers, and multi-department stores, offering a range of food items. Its brand portfolio includes Smart Way, Big K, Heritage Farm, Simple Truth Organic, and Simple Truth. The company operates approximately 2,722 supermarkets, 2,257 pharmacies, and 1,665 fuel centers in 35 US states and the District of Columbia.
The Kroger Co. (NYSE:KR) has various plans to improve its standing. It is focusing on enhancing customer loyalty, expanding its digital footprint, and, engaging in competitive pricing to drive sales and strengthen profit margins. The company’s performance reflects that it can remain profitable under various market circumstances.
The company has an established digital presence that it has attained by investing in automation, creating distribution channels in delivery and pickup, building out its own properties, and enhancing personalization over nearly a decade. The Kroger Co. (NYSE:KR) is benefiting from this presence, as its digital sales increased by 11% in the fiscal Q3 2024. Delivery sales were up by 18%, primarily driven by customer fulfillment centers. Overall, the company has raised its payouts for 18 consecutive years and supports a dividend yield of 1.96% as of February 10. It ranks third on our list of the 10 best cheap food stocks to buy now.
2. Dollar Tree, Inc. (NASDAQ:DLTR)
Forward P/E: 14.06
Number of Hedge Fund Holders: 64
Dollar Tree, Inc. (NASDAQ:DLTR) operates discount department stores and offers a wide range of merchandise under the brand names Dollar Tree and Dollar Tree Canada. Family Dollar stores offer a range of food items, including canned foods, breakfast items, dinners, and more.
The company is focusing on boosting the growth of its Dollar Tree brand and is converting stores to its in-line multi-price 3.0 format. It is opening new stores and improving the in-store experience for its customers through customer service enhancements and renovations. In fiscal Q3 2024, the company converted another 720 stores to the 3.0 format, bringing the total number of converted Dollar Tree stores to around 2,300. These stores produced around 30% of the company’s total net sales in fiscal Q3 2024.
The company reported a revenue of $7.56 billion in fiscal Q3 2024, exceeding the forecast of $7.446 billion. Its net sales also grew significantly, primarily due to its non-comparable stores. This growth was attributed to the company’s continued merchandising efforts for Family Dollar and Dollar Tree. Despite some macroeconomic challenges, Dollar Tree, Inc. (NASDAQ:DLTR) is maintaining strong operational results.
1. Albertsons Companies, Inc. (NYSE:ACI)
Forward P/E: 8.95
Number of Hedge Fund Holders: 70
Albertsons Companies, Inc. (NYSE:ACI) is a US-based food and drug retailer. It has over 2,269 stores across 34 states and the District of Columbia under 20 banners, including Star Market, Shaw’s, Albertsons, Kings Food Markets, United Supermarkets, Haggen, Kings Food Markets, Acme, Carrs, and more.
The company’s fiscal Q3 2024 revenue reached $18.8 billion, up 1.2% year-over-year but below analyst estimates. Albertsons Companies, Inc. (NYSE:ACI) is thus focusing on key strategies to drive growth. It is investing in pharmacy and health, which has driven sales penetration to over 11% of total annual revenue. Albertsons Companies, Inc. (NYSE:ACI) plans to continue investing to deliver consistent omni-execution for brand campaigns across its digital and physical assets. It also expects to build new partnerships to add digital inventory and capabilities to its platform.
It is also investing in its e-commerce business, which it runs out of its stores so its inventory is close to its customers. Its ecommerce investments have driven sales penetration to over 7% of grocery revenue. This growth has been supported by new developments in the company’s mobile app and improved quality, speed, and convenience of DriveUp & Go and in-home delivery.
Overall, ACI ranks first among the 10 cheap food stocks to buy according to hedge funds. While we acknowledge the potential of food stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ACI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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