12 Healthy and Sustainable Food Stocks to Buy

Published on July 8, 2021 at 4:51 pm by Manal Shahid in Hedge Funds, News

In this article we will take a look at the 12 healthy and sustainable food stocks to buy. You can skip our detailed analysis of the food industry’s outlook for 2021 and some of the major growth catalysts for food stocks and go directly to the 5 Healthy and Sustainable Food Stocks to Buy.

Since the beginning of the pandemic, people have become more concerned about their health. The emphasis on healthy eating has followed suit with more and more people making the switch to organic foods as well as healthy food alternatives such as plant-based meat items. This change is more pronounced within the younger generation who are willing to spend more on healthier and high-quality food items. Furthermore, consumers are also focusing more on wellness, environmental sustainability, and ethical food practices around the world which has opened up new market segments within the food industry. It has also created many new opportunities for investors as healthy food stocks are gaining momentum due to the millennial penchant for sustainability. For example, plant-based foods are an emerging market which has immense growth potential in the coming years.

According to the Bank of America, the food solutions market across the world will reach a valuation of over $300 billion by the year 2025. Factors such as development of plant-based proteins, autonomous food and grocery delivery, animal health, and organic production are some catalysts that are impacting the industry. According to a report by the Plant Based Foods Association, 57% of households in the US bought plant-based products in 2020. Moreover, the overall sales for health and organic food rose by 27% to $7 billion in the country. Research and Markets have estimated the US plant-based foods market to grow at a CAGR of 9.69% till 2027.

The growing demand for healthy and sustainable food options has brought many food companies to the forefront. For example, Beyond Meat, Inc. (NASDAQ: BYND), which went public in 2019, saw a 27% increase in retail sales in the US in the first quarter of 2021. Beyond Meat, Inc. (NASDAQ: BYND) is now expanding into markets like China and several parts of Europe. Net sales in the quarter jumped 11.4% to $108.2 million.

General Mills, Inc. (NYSE: GIS), a US grocery giant, has made significant strides in the industry by offering a large range of natural and organic products under the brand name Annie’s. The company also owns the Cascadian Farm brand which has incorporated sustainable agricultural production practices making it one of the best healthy and sustainable food stocks to buy. General Mills, Inc. (NYSE: GIS) strategy includes a hybrid model of organic and standard food products that are affordable for most consumers. Sales in the company’s organic food section experienced a surge of 7% during the quarter due to the increase in demand for home food products during the COVID-19 pandemic.

Another company that has gained significant momentum is The Hain Celestial Group, Inc. (NASDAQ: HAIN). It is one of the best performing stocks in the healthy food market as the company’s shares gained by approximately 24% over the last 12 months. As more consumers are making the shift towards a sedentary lifestyle, The Hain Celestial Group, Inc. (NASDAQ: HAIN) is experiencing a rise in demand for its natural food products. The company’s Yves Veggie Cuisine brand has already made a mark by introducing innovative plant-based products with no artificial ingredients or flavorings.

Similarly, many grocery giants such as The Kroger Co. (NYSE: KR) and Amazon.com, Inc. (NASDAQ: AMZN) have introduced new product lines and organic food brands to cater to the burgeoning demand for healthy and sustainable food items. The Kroger Co. (NYSE: KR) recently added 50 new plant-based products under the Simple Truth brand which includes non-dairy products as well. Similarly, Amazon.com, Inc. (NASDAQ: AMZN) has a dedicated healthy foods store that offers a variety of products ranging from snack foods to agricultural produce. The company acquired Whole Foods in 2017 which is a certified organic grocery chain popular for its selection of plant-based products.

Many other companies are also taking advantage of these new opportunities in the food industry.

Healthy and Sustainable Food Stocks to Buy

Photo by NeONBRAND on Unsplash

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Let’s now discuss the 10 healthy and sustainable food stocks to buy. We took into account hedge fund sentiment, analysts’ ratings, fundamentals and future growth potential while choosing these stocks.

Healthy and Sustainable Food Stocks to Buy

12. Lifeway Foods, Inc. (NASDAQ: LWAY)

Market Capitalization: $96.13 million
Number of Hedge Fund Holders: 4

Ranking 12th on the list is Lifeway Foods, Inc. (NASDAQ: LWAY) which has entered the healthy and sustainable food industry with the introduction of its pro-biotic cultured dairy product called Kefir. The company has made a name internationally as well and has recently announced to expand their distribution into France as well. Lifeway Foods, Inc. (NASDAQ: LWAY) has experienced strong growth in the past 2 years and maintained this momentum in the first quarter of FY 2021 as well. The company had a 6th consecutive increase in quarterly net sales which amounted to $4 million in the current quarter. Moreover, net income increased by approximately 800% to $1.3 million during the quarter compared to only $150,000 in the first quarter of the preceding year.

This tremendous performance has also landed Lifeway in the Best Small Companies list by Forbes. The company has also announced to repurchase 250,000 shares in its latest press release. With a market cap of $96.13 million and a gross profit margin of over 30%, there is no doubt that Lifeway Foods, Inc. (NASDAQ: LWAY) is one of the best healthy and sustainable food stocks to buy.

11. SunOpta Inc. (NASDAQ: STKL)

Market Capitalization: $1.39 billion
Number of Hedge Fund Holders: 21

SunOpta Inc. (NASDAQ: STKL) is a renowned food company that focuses on the production of plant-based products and beverages. The company reported a total revenue of $207.6 million for Q1 of 2021 representing a 12.4% year-over-year growth. Revenues for plant-based items grew by a whopping 47% year-over-year. Moreover, gross margin increased by 130 basis points from 13.1% in 2020 to 14.4% this quarter. Adjusted earnings per share amounted to $0.01 per share compared to a loss of $0.06 per share in Q1 of 2020.

SunOpta Inc. (NASDAQ: STKL) has also acquired another popular plant-based beverage brand called Dream and WestSoy which will contribute to the further growth of their plant-based foods segment. 21 hedge funds in Insider Monkey’s database held stakes in SunOpta Inc. (NASDAQ: STKL) in the first quarter of 2021. The company ranks 11^th in the list of the 12 best healthy and sustainable food stocks to buy.

Like The Kroger Co. (NYSE: KR), Amazon.com, Inc. (NASDAQ: AMZN), General Mills, Inc. (NYSE: GIS) and Beyond Meat, Inc. (NASDAQ: BYND), SunOpta Inc. (NASDAQ: STKL) is a noteworthy healthy and sustainable food stock to invest in.

10. United Natural Foods, Inc. (NYSE: UNFI)

Market Capitalization: $1.98 billion
Number of Hedge Fund Holders: 23

United Natural Foods, Inc. (NYSE: UNFI) specializes in the production and distribution of natural and specialty organic food items in the US and Canada. Headquartered in Rhode Island, the company has gained much momentum since 2020 and has achieved a target of over $6.62 billion of total revenues in the 3rd quarter of FY 2021. The company reported an EPS of $0.94 per share which beat analyst expectations. The company has adjusted its full year outlook for FY 2021 and has projected a revenue view of $27-$27.8 billion.

United Natural Foods, Inc. (NYSE: UNFI) also improved its Relative Strength Rating from 88 to 91. The organic food grocer has also made the news with its adoption of electrical transport refrigerated trailer units in order to make their deliveries more sustainable and environmentally friendly. These unites are expected to save about 135,000 gallons of diesel per year. UNFI has experienced an influx of online sales and has significantly benefited from its online community marketplace which provides a B2B digital e-commerce solution. This platform has enabled their customers to get access to a large assortment of organic and healthy food products, making it one of the best healthy and sustainable food stocks to buy.

Like Amazon.com, Inc. (NASDAQ: AMZN), General Mills, Inc. (NYSE: GIS) and Beyond Meat, Inc. (NASDAQ: BYND) and SunOpta Inc. (NASDAQ: STKL), United Natural Foods, Inc. (NYSE: UNFI) is a noteworthy healthy and sustainable food stock to invest in.

9. B&G Foods, Inc. (NYSE: BGS)

Market Capitalization: $2.193 billion
Number of Hedge Fund Holders: 10

B&G Foods, Inc. (NYSE: BGS) is making its mark in the healthy food industry with its portfolio of household products such as shelf-stable and sustainable frozen foods. The company caters to markets in US, Canada, and Puerto Rico. B&G Foods, Inc. (NYSE: BGS) reported strong Q1 results for fiscal year 2021 with adjusted net income of $34.1 million or $0.52 per adjusted diluted share representing an increase of 16.7% year-over-year. The company also reported net sales of $505.1 million for the quarter ended March 31^st which is a year-over-year increase of 12.4%. This strong growth was driven by the acquisition of Crisco, a vegetable-based shortening used for cooking purposes. The company has also improved its net sales guidance in the range of $2.05 to $2.10 billion.

B&G’s board has also declared a quarterly dividend amounting to $0.475 per common share which is payable on July 30^th, 2021. The company has experienced a significant increase in demand due to a higher at-home consumption of food products due to the pandemic. B&G Foods, Inc. (NYSE: BGS) has earned the number 9 spot in the 12 healthy and sustainable food stocks to buy list.

Diamond Hill Capital is an investment management company that highlighted B&G Foods, Inc. (NYSE: BGS) in its investor letter for the first quarter of 2021. Here is what they stated:

“Processed and packaged foods manufacturer B&G Foods, Inc. outperformed, most likely due to strong weekly scanner data that showed improving trends in its business as consumers stocked up their pantries and refrigerators during quarantine.”

Like Beyond Meat, Inc. (NASDAQ: BYND), Amazon.com, Inc. (NASDAQ: AMZN), General Mills, Inc. (NYSE: GIS) and SunOpta Inc. (NASDAQ: STKL), B&G Foods, Inc. (NYSE: BGS) is a noteworthy healthy and sustainable food stock to invest in.

8. Sprouts Farmers Market, Inc. (NASDAQ: SFM)

Market Capitalization: $3.343 billion
Number of Hedge Fund Holders: 21

Sprouts Farmers Market, Inc. (NASDAQ: SFM) is a grocery chain that specializes in organic foods and other natural products, operating through the healthy grocery stores segment. The chain spans across 362 stores in the US and is headquartered in Phoenix, Arizona. Sprouts Farmers Market, Inc. (NASDAQ: SFM) recently opened up a new distribution center in Florida which has expanded its operations significantly.

A 4% increase in net sales was reported by the company at the end of Q1 of fiscal year 2021, amounting to a whopping $1.6 billion. Net income totaled $83 million for the quarter as compared to $92 million in the same quarter of the previous year. The diluted EPS for the quarter was $0.70 compared to $0.78 per share in the previous quarter. Due to its focus on organic and healthy products, Sprouts Farmers Market, Inc. (NASDAQ: SFM) has landed a spot amongst the 12 healthy and sustainable food stocks to buy now.

At the end of the first quarter of 2021, 21 hedge funds tracked by Insider Monkey held stakes worth more than $404 million in Sprouts Farmers Market, Inc. (NASDAQ: SFM) as compared to 25 hedge funds in the previous quarter worth $393 million.

Sprouts Farmers Market, Inc. (NASDAQ: SFM) was also mentioned in the Q1 2021 investor letter by an investment management firm, Appleseed Fund. This is what they commented:

“Our most significant contributors to the Fund’s equity performance during the quarter (includes) Sprouts Famers Markets (SFM). Sprouts has benefited from the market slowly recognizing that the company’s growth last year was only driven in part by lockdowns; the company should enjoy strong growth through market share gains for years to come. Sprouts’ unique value proposition as a particularly attractive store in which shoppers can find a wide assortment of organic and natural produce should benefit shareholders and consumers alike.”

Along with companies like The Hain Celestial Group, Inc. (NASDAQ: HAIN), General Mills, Inc. (NYSE: GIS), Amazon.com, Inc. (NASDAQ: AMZN), and B&G Foods, Inc. (NYSE: BGS), Sprouts Farmers Market, Inc. (NASDAQ: SFM) is one of the best healthy and food stocks worth investing in.

7. The Simply Good Foods Company (NASDAQ: SMPL)

Market Capitalization: $3.499 billion
Number of Hedge Fund Holders: 22

The Simply Good Foods Company (NASDAQ: SMPL) is known for selling healthy snack and meal alternatives. It is a packaged food and beverage company that operates in the US as well as internationally. The Simply Good Foods Company (NASDAQ: SMPL) announced its first quarter earnings for 2021 in which net sales rose by 1.5% totaling $230.6 million which surpassed Wall Street analyst expectations. Moreover, the adjusted quarterly earnings were $0.25 per share, rising by 8.7% year-over-year. Overall, The Simply Good Foods Company (NASDAQ: SMPL)’s North American segment sales grew by 1% year-over-year and the gross margin increased by 150 basis points to 39.1%.

The Simply Good Foods Company (NASDAQ: SMPL) has also been in the news recently for partnering up with Walmart and Feeding America to fight hunger in the US. The Simply Good Foods Company (NASDAQ: SMPL) has gained significant traction over the past year and its latest earnings show that the stock has solid footings in the industry making it one of the 12 best healthy and sustainable food stocks to buy.

Like Amazon.com, Inc. (NASDAQ: AMZN), Herbalife Nutrition Ltd. (NYSE: HLF), Beyond Meat, Inc. (NASDAQ: BYND), General Mills, Inc. (NYSE: GIS) and B&G Foods, Inc. (NYSE: BGS), The Simply Good Foods Company (NASDAQ: SMPL) is another healthy and sustainable food worth investing in.

6. The Hain Celestial Group, Inc. (NASDAQ: HAIN)

Market Capitalization: $4.143 billion
Number of Hedge Fund Holders: 23

The Hain Celestial Group, Inc. (NASDAQ: HAIN) is a New York-based company that is known for selling healthy and natural food products in over 80 countries around the world. The company reported a strong financial first quarter for 2021 with a net income of $34.3 million compared to $25 million in the same quarter of the previous year. The gross margin for the quarter was 26.4% representing an increase of 244 basis points year-over-year. The adjusted EBITDA was reported to be $73.8 million while the EPS was $0.34 per diluted share as compared to $0.24 in Q1 of 2020. The Hain Celestial Group, Inc. (NASDAQ: HAIN) has also made the news as BASF Canada’s Sustainability Awards Program mentioned HAIN as a Sustainability Champion. According to CNN Business, 14 investment analysts have issued a “Buy” rating to (NASDAQ: HAIN) making it one of the top 12 healthy and sustainable food stocks to buy.

At the end of the first quarter of 2021, 23 hedge funds tracked by Insider Monkey held stakes worth more than $933 million in The Hain Celestial Group, Inc. (NASDAQ: HAIN). The company was also mentioned in the Q1 2021 investor letter by Madison Funds. Here is what the investment management firm had to say about the HAIN stock:

“Year-to-date, our Consumer Staples stocks delivered outstanding performance in 2021; however, in investors’ rush to reposition, the sector lagged the overall index. Our largest position, the Hain Celestial Group Inc (HAIN), saliently illustrates this. Although a top performer last year, the shares lagged this quarter. Fundamentals continue to be strong for HAIN, and if we’re right about the company’s turnaround efforts and margin opportunity, the stock has significant upside. We believe our staples names are more than just defensive companies but have significant opportunity to grow through the cycle.”

Like The Kroger Co. (NYSE: KR), Amazon.com, Inc. (NASDAQ: AMZN), General Mills, Inc. (NYSE: GIS) and Beyond Meat, Inc. (NASDAQ: BYND), The Hain Celestial Group, Inc. (NASDAQ: HAIN) is a notable healthy and sustainable food stock to invest in.

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