5. Conagra Brands Inc (NYSE: CAG)
Illinois-based Conagra sells a variety of food products for both consumers and the food services industry. The company’s products include frozen dinners, hot cocoa, snacks and peanut butter.
Earlier in January, Conagra reported fiscal second-quarter results, posting an organic net sales growth of 8.1%. Adjusted gross margin in the quarter jumped by 144 bps to 29.9% versus the consensus of $29.4%. Adjusted EBITDA increased 16.7% to $712 million. The company’s CEO said that Conagra will benefit from the shifting consumer behavior that is expected to persist even after the pandemic.
As of the end of the third quarter, 35 hedge funds in Insider Monkey’s database had Conagra on their portfolios. The net worth of these positions is $77 million. Here is what we recently said about CAG:
According to Connolly, Conagra had an ‘excellent’ quarter with a 6% rise in net sales due to the increased demand from the public that is caused by the restrictions brought out by the pandemic. “We have a broad base strength and excellent fundamentals. Our consumers have discovered the massive innovation infusion we’ve launched over the past few years and they’re coming back again and again. But food stocks have not been up even when posting strong numbers. The market is clearly demonstrating a bit of a ‘wait and see’ attitude towards food stocks right now”. Sean Connolly also stated that they are not just looking at the absolute strength but also at their company’s relative strength. For him, the relative strength is a ‘critical leading indicator’ that can signal investors which company will emerge stronger.
“We’ve been transforming our portfolio for 5 years now. It has been a massive innovation overall”. He stated, the thing they’re experiencing with the pandemic is that consumers are now discovering that the frozen food they consume today is outstanding. “It’s essentially fresh food that is frozen but it’s on call and ready when they are and it’s a great value. Excellent food, excellent value and they’re buying it again and again,”.
4. Tyson Foods, Inc. (NYSE: TSN)
Arkansas-based Tyson is the second largest processor of meat, chicken and pork. In December 2020, Tyson Foods shares reached a nine-month high after Piper Sandler analyst Michael Lavery upgraded the stock to Overweight from Neutral with a $77 price target, upped from $70. The analyst said that the market has not priced in the upcoming recovery in the food services sector following the coronavirus vaccines. Tyson has a solid exposure to the food services and restaurant sector.
Cliff Asness’ AQR Capital Management is one of the top shareholders of Tyson, with 1.93 million shares of the company, worth $115.1 million. The fund is one of the 36 elite funds tracked by Insider Monkey that reported owning shares in Tyson entering the fourth quarter. Here is what we said about TSN last month:
“The stock of one of the largest processors of chicken, beef and pork in the world, is down by more than 22% since the beginning of the year as the company has been hit hard by the pandemic with several facilities closed over outbreaks. However, Tyson posted better than expected EPS and revenue for the last quarter and provided a strong full year-guidance, saying that it expects strong performance of its Beef and Pork segments and growth in Chicken and Prepared foods segments. Recently, Piper Sandler upgraded Tyson Foods, Inc. (NYSE:TSN) to Overvweight from Neutral and raised the price target to $77 from $70. The analyst suggested that a reopening of the economy as a vaccine is released will boost food service sales, although eat-at-home trends will also remain strong.”
3. General Mills, Inc. (NYSE: GIS)
Minnesota-based General Mills ranks 3rd on the list of 10 best food stocks to buy now. The company is behind famous brands like Old El Paso, Häagen-Dazs and Cheerios. In the fiscal second quarter of 2021, General Mills reported a 7% jump in organic sales, above the Street’s estimate of 6.2%. Adjusted gross margin increased 20 basis points to 35.5% of sales. The company said that it expects strong growth for the remainder of 2021, as at-home food demand continues to soar.
Of the 816 hedge funds tracked by Insider Monkey, 36 held stakes in General Mills as of the end of the September quarter. The net worth of these stakes is about $1.1 billion.
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Follow General Mills Inc (NYSE:GIS)
2. Kraft Heinz Co (NASDAQ: KHC)
Kraft Heinz is one of the biggest food and beverage companies in North America, with annual revenue of $25 billion, as of 2019. According to a Nielsen report, Kraft’s sales posted better-than-expected results in the four-week period ending Dec. 12. The company’s sales jumped over 10% in the period. In the third quarter, Kraft reported a 6.3% increase in revenue, surpassing the Street’s forecast of 5.1%. Adjusted EBITDA in the quarter totaled $1.67 billion, versus $1.27 billion consensus.
Warren Buffett’s Berkshire Hathaway owns 325.63 million shares of Kraft, as of the end of the third quarter. The total worth of these shares is $9.75 million. Overall, 39 hedge funds held stakes in the company entering the fourth quarter.
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1. Mondelez Intl (NASDAQ: MDLZ)
Mondelez tops the list of 10 best food stocks to buy now. The Illinois-based company is famous for Cadbury chocolate and Oreo cookies. It has an annual revenue of about $26 billion and operates in about 160 countries across the globe. Earlier in January, Jefferies analyst Rob Dickerson upped Mondelez’s price target to $66 from $62 and maintained a Buy rating. Mondelez is in Jefferies’ top food picks of 2021.
A total of 50 hedge funds tracked by Insider Monkey held stakes in Mondelez, as of the end of the third quarter, compared to 54 funds a quarter earlier.
Please also see Top 10 Agriculture Stocks To Buy Now and 10 Best Dividend Stocks Under $20.
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Disclosure: None.
