In this piece, we will take a look at the 14 most profitable food stocks. For more food companies, head on over to 5 Most Profitable Food Stocks.
Human progress is intricately linked to food. The shift from a nomadic, hunter-gatherer lifestyle to settled civilizations and societal advancement is primarily attributed to the ability of humans to cultivate their own food and pool resources. Of course, since then, caloric consumption worldwide has expanded significantly due to advancements in agricultural mechanization, leading to increased food production. The United Nations projects a continued growth in global caloric consumption, estimating an increase from 2,789 kilocalories per person in 2000 to 3,139 kilocalories by 2050, representing a 12% growth, as per data from the UN Food and Agricultural Organization (FAO). In that regard, the food industry stands as one of the vital sectors globally and is often considered a resilient haven during economic downturns. This is because, even in challenging economic times, consumers may cut back on luxury expenses like electronics but will consistently need to purchase essential food items.
As we approach the end of 2023, it’s noteworthy to highlight certain food items that have demonstrated resilience in the midst of economic challenges and appear to be well-positioned for the coming year. The emphasis on broadening plant-based alternatives has especially favored companies providing meat substitutes, maintaining a substantial presence in consumers’ shopping preferences. The period has been characterized by inflation, leading to increased input costs for manufacturers and impacting consumers’ purchasing power, subsequently affecting companies’ sales volumes. However, there are indications that the inflationary trend is now showing signs of moderation.
Examining the financial projections for the food industry, as outlined in a research report from Fortune Business Insights, underscores the immense magnitude of the sector. Focusing on the food processing market, the report highlights that the sector reached an impressive value of $2.3 trillion in 2021. Furthermore, it anticipates a compound annual growth rate (CAGR) of 10.6%, projecting the sector to reach an estimated value of $5.1 trillion by 2029.
Presently, let’s examine some of the most profitable food companies globally, which include the likes of PepsiCo, Inc. (NASDAQ:PEP), The Coca-Cola Company (NYSE:KO), and General Mills, Inc. (NYSE:GIS), among others listed below.
Our Methodology
In compiling our list of the most profitable food stocks for investment, we conducted a thorough analysis of Insider Monkey’s Q3 2023 database to identify industry leaders evaluated by hedge fund sentiment. Subsequently, the selected companies were ranked based on their trailing twelve-month net income. Over the past decade, the top 10 consensus stock picks of hedge funds have outperformed the S&P 500 Index by more than 140 percentage points (see the details here). This is a significant outperformance, and it underscores the importance of closely monitoring this frequently overlooked indicator.
14. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Latest TTM Net Worth: $1.17 billion
Number of Hedge Fund Holders: 57
Chipotle Mexican Grill, Inc. (NYSE:CMG), commonly referred to as Chipotle, is an American consumer company recognized for its chain of fast casual restaurants. These establishments specialize in crafting bowls, tacos, and Mission burritos customized in front of the customer. Chipotle has a presence in various countries, including the United States, United Kingdom, Canada, Germany, and France.
As of the end of the third quarter of 2023, 57 hedge funds had stakes in Chipotle Mexican Grill, Inc. (NYSE:CMG). Bill Ackman’s Pershing Square is the largest stakeholder of the company, with 953,608 shares worth $1.75 billion.
Pershing Square Holdings made the following comment about Chipotle Mexican Grill, Inc. (NYSE:CMG) in its Q2 2023 investor letter:
“Chipotle Mexican Grill, Inc. (NYSE:CMG)’s business strength continued in 2023, driven by the company’s focus on exceptional food and operational excellence. During the second quarter, Chipotle grew same-store sales by 7.4%, or 40% from 2019 levels. Transactions grew 4.4%, a sequential improvement compared to the first quarter, and price increases from 2022 contributed 5.5% offset somewhat by a shift from group to individual orders which was a 2.5% headwind. The negative group to individual impact should shrink in the balance of the year and cease to be a headwind as we enter 2024.
Chipotle’s ongoing traffic momentum is fueled by improving in-restaurant execution and its continued cadence of successful menu innovation. The current limited time offering, chicken al pastor, is ordered in one out of every five transactions. Management plans to launch a new limited time offering later in the third quarter. Unlike most competitors, Chipotle has not yet taken pricing in 2023, thereby further improving its industry-leading value proposition. Management did, however, signal its openness to increasing menu prices later this year if cost inflation persists…” (Click here to read the full text)
Much like PepsiCo, Inc. (NASDAQ:PEP), The Coca-Cola Company (NYSE:KO), and General Mills, Inc. (NYSE:GIS), Chipotle Mexican Grill, Inc. (NYSE:CMG) ranks as one of the most profitable food stocks to invest in.
13. Monster Beverage Corporation (NASDAQ:MNST)
Latest TTM Net Worth: $1.57 billion
Number of Hedge Fund Holders: 42
Monster Beverage Corporation (NASDAQ:MNST) is a U.S.-based company that focuses on the creation, promotion, sale, and distribution of energy drink beverages and concentrates. It features well-known brands such as Monster Energy, Relentless, and Burn.
On November 13, financial firm Jefferies began coverage of Monster Beverage Corporation (NASDAQ:MNST) stock with a Buy rating and set a price target of $65. The analysis highlighted the robustness of the company’s core business.
At the end of the third quarter of 2023, 42 hedge funds in the database of Insider Monkey held stakes worth $1.05 billion in Monster Beverage Corporation (NASDAQ:MNST), compared to 44 in the preceding quarter worth $1.19 billion.
12. Sysco Corporation (NYSE:SYY)
Latest TTM Net Worth: $1.81 billion
Number of Hedge Fund Holders: 39
Sysco Corporation (NYSE:SYY), the largest wholesale food distributor in the United States, is an American multinational corporation engaged in the marketing and distribution of food products, smallwares, kitchen equipment, and tabletop items to restaurants, healthcare facilities, and educational institutes.
On November 16, Sysco Corporation (NYSE:SYY) declared a quarterly dividend of $0.50 per share, maintaining the same level as its previous dividend. The company distinguishes itself as one of the premier consumer stocks on our roster, demonstrating an impressive track record of consistently increasing dividends for the past 54 years. As of December 20, the stock boasted a dividend yield of 2.73%.
The number of hedge funds monitored by Insider Monkey that held stakes in Sysco Corporation (NYSE:SYY) increased to 39 in Q3 2023, the same as the previous quarter. The cumulative value of these stakes exceeded $797 million. Brandon Haley’s Holocene Advisors emerged as the leading stakeholder in the company during Q3, with ownership of over 2.88 million shares.
11. The Kroger Co. (NYSE:KR)
Latest TTM Net Worth: $1.90 billion
Number of Hedge Fund Holders: 41
The Kroger Co. (NYSE:KR), widely recognized as Kroger, is an American retail corporation that manages an extensive network of supermarkets and multi-department stores across 35 states in the United States. With a presence in over 2,700 supermarkets and multi-department stores, Kroger holds a prominent position in the global food retail industry.
Kroger Co (NYSE:KR) disclosed its third-quarter results recently. The adjusted earnings per share (EPS) for the period were $0.95, surpassing expectations by $0.03. The reported revenue stood at $33.96 billion, exceeding estimates by $60 million.
At the end of the third quarter of 2023, 41 hedge funds tracked by Insider Monkey owned investments in The Kroger Co. (NYSE:KR), which was a slight decline from 43 in the previous quarter. The overall value of these stakes is over $3.13 billion.
Oakmark Funds funds mentioned The Kroger Co. (NYSE:KR) in its Q3 2023 investor letter. Here is what the firm has to say:
“The Kroger Co. (NYSE:KR) is the second-largest grocery retailer in America behind only Walmart. Although the grocery industry is highly competitive, Kroger’s scale advantages allow it to offer a more compelling value proposition than smaller peers and earn higher returns on capital. In recent years, the market has assigned Kroger a lower multiple due to concerns that e-commerce would disrupt traditional brick-and-mortar grocery. However, we believe the company’s performance through the pandemic highlighted that its store footprint, distribution infrastructure, technology investments and strong brand all position the company well for a world with higher online grocery adoption. The stock trades for just 10x our estimate of next year’s EPS, which we believe is attractive given Kroger’s competitive positioning and earnings growth outlook. The pending merger with Albertsons has the potential to drive accelerated earnings growth and further scale advantages. If the merger is not approved, the company will have the capacity to return approximately 25% of its market cap to shareholders.”
10. The Hershey Company (NYSE:HSY)
Latest TTM Net Worth: $1.91 billion
Number of Hedge Fund Holders: 42
The Hershey Company (NYSE:HSY), commonly known as Hershey or Hershey’s, is an American multinational confectionery company with its headquarters in Hershey, Pennsylvania, United States. Hershey is also associated with Hersheypark and Hershey’s Chocolate World, located in the same region. In the third quarter, the confectionery maker experienced an 11% year-over-year increase in revenue, reaching $3.03 billion, surpassing estimates by $80 million. Additionally, the company’s earnings per share of $2.60 exceeded the consensus by $0.14.
At the end of Q3 2023, 42 hedge funds tracked by Insider Monkey reported having stakes in The Hershey Company (NYSE:HSY), compared with 43 in the preceding quarter. The total value of these stakes is roughly $760 million. Among these hedge funds, Alyeska Investment Group was the company’s leading stakeholder in Q3.
9. General Mills, Inc. (NYSE:GIS)
Latest TTM Net Worth: $2.45 billion
Number of Hedge Fund Holders: 39
General Mills, Inc. (NYSE:GIS) is a well-known American multinational company recognized for its production and marketing of branded processed consumer foods, widely distributed through retail channels. The company’s roots can be traced back to its founding near Saint Anthony Falls in Minneapolis, along the Mississippi River, where it initially gained prominence as a significant flour milling operation.
In the second quarter of fiscal year 2024, General Mills, Inc. (NYSE:GIS)’s pet segment, inclusive of Blue Buffalo, experienced a 4% decline in net sales, amounting to $569 million. This decrease was attributed to lower pound volume, partially mitigated by favorable net price realization and mix. Dry pet food encountered a mid-single-digit decrease in net sales, wet pet food experienced a double-digit decline, and pet treats saw a double-digit increase compared to the previous year. Despite the sales challenges, the segment’s operating profit reached $102 million, marking an 18% increase. This growth was primarily fueled by favorable net price realization and mix, along with cost savings. However, it was partially offset by lower volume, increased other supply chain costs, and elevated expenses.
As of the end of Q3 2023, 39 hedge fund investors had allocated their investments to General Mills, Inc. (NYSE:GIS), according to the Insider Monkey database. The largest shareholder of General Mills, Inc. (NYSE:GIS) was Millennium Management, with a holding of approximately 1.6 million shares valued at about $102.8 million.
8. The Kraft Heinz Company (NASDAQ:KHC)
Latest TTM Net Worth: $2.99 billion
Number of Hedge Fund Holders: 40
The Kraft Heinz Company (NASDAQ:KHC), commonly referred to as Kraft Heinz, is an American multinational food corporation resulting from the merger of Kraft Foods and H.J. Heinz Company. Operating with dual headquarters in Chicago and Pittsburgh, the company engages in the production and distribution of an extensive array of products, spanning cheese, prepared meals, meats, dairy products, condiments, coffee, and more. The Kraft Heinz Company (NASDAQ:KHC) has adjusted its full-year 2023 outlook for adjusted EPS, now anticipated to fall within the range of $2.91 to $2.99, an increase from the prior range of $2.83 to $2.91.
In the third quarter of the current year, 40 out of the 910 hedge funds analyzed by Insider Monkey retained a stake in the company. The leading hedge fund investor in The Kraft Heinz Company (NASDAQ:KHC) is Berkshire Hathaway, overseen by Warren Buffett, holding a substantial investment valued at $10.9 billion.
7. Archer-Daniels-Midland Company (NYSE:ADM)
Latest TTM Net Worth: $3.94 billion
Number of Hedge Fund Holders: 37
Archer-Daniels-Midland Company (NYSE:ADM), a renowned American multinational engaged in food processing and commodities trading since its establishment in 1902, declared a quarterly dividend of $0.45 per share on November 1. This dividend aligns with the company’s preceding dividend distribution. Impressively, ADM has maintained a remarkable streak of dividend growth, extending over 50 consecutive years.
As of the end of Q3 2023, 37 hedge funds in Insider Monkey’s database reported holding stakes in Archer-Daniels-Midland Company (NYSE:ADM), up from 32 in the preceding quarter. The total value of these stakes is over $769 million. With over 2.8 million shares, AQR Capital Management was the largest stakeholder of the company at the end of Q3 2023.
6. Starbucks Corporation (NASDAQ:SBUX)
Latest TTM Net Worth: $4.12 billion
Number of Hedge Fund Holders: 60
Headquartered in Seattle, Washington, Starbucks Corporation (NASDAQ:SBUX) is an American multinational chain of coffeehouses and roastery reserves. Operating in over 80 countries, the company is renowned for its roasted whole beans and ground coffees, ready-to-drink beverages, and a variety of food products.
Earlier this November, Starbucks Corporation (NASDAQ:SBUX) reported its fiscal Q4 results. The adjusted earnings per share (EPS) for the quarter stood at $1.06, surpassing estimates by $0.09. The quarterly revenue witnessed an approximately 11.4% year-over-year increase, reaching $9.37 billion, exceeding estimates by $90 million.
At the end of September 2023, 60 hedge funds owned stakes in Starbucks Corporation (NASDAQ:SBUX), up from 59 in the previous quarter, as per Insider Monkey’s database. The collective value of these stakes is over $2.7 billion.
ClearBridge Multi Cap Growth Strategy made the following comment about Starbucks Corporation (NASDAQ:SBUX) in its Q2 2023 investor letter:
“Top heavy leadership has overshadowed weakness across much of the equity market. We took advantage of the narrow breadth in the second quarter to increase our exposure to the consumer discretionary sector with two purchases that further enhance portfolio diversification and should help support consistent performance through a full cycle.
Starbucks Corporation (NASDAQ:SBUX) is the leading provider of specialty coffee beverages, operating close to 19,000 global stores primarily in North America, China and Japan and 37,000 licensed partner locations. We view Starbucks as a quality compounder with strong free cash flow, operating in a segment and in dayparts that are very much routine-based and habitual, balancing the business’s exposure to discretionary spending. Additionally, Starbucks is still in the early stages of its reinvention plan to help accelerate revenue growth over the next several years on the back of better same store sales and unit growth. Coupled with the benefits of margin expansion, we believe the company can drive double-digit EPS growth at scale.”
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Disclosure. None. 14 Most Profitable Food Stocks is originally published on Insider Monkey.
