Below we present the list of 5 Best Food Stocks to Buy Now. For our methodology and a more comprehensive list please see 10 Best Food Stocks to Buy Now.
5. Performance Food Group Company (NYSE:PFGC)
Number of Hedge Fund Shareholders: 37
Performance Food Group Company (NYSE:PFGC) sells a wide range of food products to restaurants, retailers, and other institutions. The company’s leading brands include Heritage Ovens baked goods, Village Garden salad dressings, Braveheart 100% Black Angus beef, and Ascend Beverages.
Performance Food Group had an outstanding fiscal 2021, growing revenue by 21% and earning $0.56 in adjusted EPS, $1.42 better than its 2020 performance. That trend continued in FY22, with sales growing to $50.9 billion. The company expects to grow its adjusted EBITDA by $200 million at the mid-range of its estimate in its fiscal 2023, to $1.2 billion. BMO Capital analyst Kelly Bania raised her price target on PFGC to $70 from $61 following the latest quarterly results and is bullish on the company’s projected margin expansion during FY23.
Hedge fund ownership of Performance Food Group Company (NYSE:PFGC) jumped by 28% during the second quarter, with Brian Scudieri’s Kehr’s Ridge Capital and Anand Parekh’s Alyeska Investment Group among the funds building new stakes in PFGC during the quarter.
Another fund that’s bullish on Performance Food Group Company (NYSE:PFGC) is the ClearBridge Investments Select Strategy, which had this to say about the company in its Q4 2021 investor letter:
“Performance Food Group is another example of a quality franchise bought during a depressing period for the foodservice industry that has flexed its balance sheet to make acquisitions of weaker players and continues to consolidate its leading market share.”
4. US Foods Holding Corp. (NYSE:USFD)
Number of Hedge Fund Shareholders: 39
US Foods Holding Corp. (NYSE:USFD) is one of the biggest foodservice distributors in the world, supplying fresh, frozen, dried, and non-food products to more than 250,000 customer locations. Its brands include Cross Valley Farms, Metro Deli, Molly’s Kitchen, Valu+Plus, and Roseli.
US Foods Holding Corp. (NYSE:USFD) grew sales and EBITDA by 15% and 11% respectively in Q2 and anticipates full year adjusted EBITDA of $1.25 billion at the mid-range of its guidance. The company is aiming to grow EBITDA to $1.7 billion by 2024. Margin expansion is also expected to improve next year as some of the company’s staffing headwinds ease.
Hedge funds bailed on US Foods Holding Corp. (NYSE:USFD) during the first half of 2018, but their ownership of the stock has remained relatively stable since. Scott Ferguson’s Sachem Head Capital is the most bullish hedge fund on USFD, owning 18.9 million shares and having 13F exposure to the stock of 17.5%.
3. The Hershey Company (NYSE:HSY)
Number of Hedge Fund Shareholders: 44
The Hershey Company (NYSE:HSY) is well known for its collection of chocolate products and confectionaries, though the company also sells pantry items like baking ingredients, toppings, and spreads, as well as gums, mints, and meat snacks.
The Hershey Company (NYSE:HSY) shares have been one of the better performers on the market this year, gaining 15%. The latest surge followed the release of the company’s Q2 results, which showed sales jumped by 19.3% year-over-year to $2.37 billion while earnings shot up by 22% to $1.80 per share. Hershey used the windfall to ratchet up its quarterly dividend payments by 15% to $1.036, giving the shares a yield of 1.88%.
Hedge funds have very gradually grown more bullish on The Hershey Company (NYSE:HSY) over the years, with the stock tying its all-time ownership among hedge funds during Q2. Jim Simons’ Renaissance Technologies owns a 3.67 million share stake in HSY worth $790 million as of June 30.
2. Mondelez International, Inc. (NASDAQ:MDLZ)
Number of Hedge Fund Shareholders: 50
Mondelez International, Inc. (NASDAQ:MDLZ) is a snack food and beverage giant that sells iconic brands like Oreo, Cadbury, Trident, Halls, and Nabisco. The company operates more than 150 manufacturing facilities and sells its products in more than 160 countries worldwide.
Mondelez International, Inc. (NASDAQ:MDLZ) shares were up throughout much of 2022, but are now down by about 5% after trending down for much of the last month. Higher prices has the company anticipating solid organic revenue growth of greater than 8% this year, though higher input and transportation costs are nonetheless weighing on its bottom line. Q2 EPS of $0.54 missed estimates by $0.10 and gross margin plummeted by 3.3 percentage points to 36.3%.
Unlike Hershey, hedge funds have slowly been unloading Mondelez International, Inc. (NASDAQ:MDLZ) over the years, with 29% fewer smart money shareholders of the company on June 30 compared to early 2016. Several funds do own significant $200 million-plus stakes in MDLZ, including Ken Griffin’s Citadel Investment, Ric Dillon’s Diamond Hill Capital, and John Overdeck and David Siegel’s Two Sigma Advisors.
1. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Shareholders: 68
Topping the list beverage and snack giant PepsiCo, Inc. (NASDAQ:PEP), which distributes an impressive list of brands globally, including its eponymous soft drink, Doritos, Cracker Jack, Lay’s, Quaker, Pearl Milling Company (formerly Aunt Jemima), Smartfood, Cap’n Crunch, and Cheetos.
Pepsi’s Quaker Foods and Frito Lay brands have been a strong driver of growth, driving year-to-date North American sales up by 14% through July, while Latin American sales jumped by 21%. Yet while Pepsi has performed well during the pandemic and is often seen as recession proof, the company is nonetheless mulling layoffs to cut costs according to Fox Business’ Charles Gasparino. Pepsi became a dividend king this year, with its shares yielding 2.82%.
PepsiCo, Inc. (NASDAQ:PEP) tied an all-time high in ownership among hedge funds at the end of Q2, with 68 long PEP, up from 54 two years earlier. Donald Yacktman, Terry Smith, and Ray Dalio’s funds all have greater than $600 million positions in Pepsi.
The ClearBridge Large Cap Value ESG Fund discussed some of the positive traits from PepsiCo, Inc. (NYSE:PEP)’s first quarter results in its Q2 2022 investor letter:
“Also in the stable and predictable cash flow camp, though with a very different business model, global food and beverage company PepsiCo (NYSE:PEP) reported very strong organic growth in the first quarter, driven by healthy price/mix, and raised revenue guidance, while holding EPS guidance. Notably, its beverage business showed expanding margins.”
For more of the latest stock picks worth considering for your portfolio, check out the 15 Best Gambling Stocks To Buy and the Best Stocks For Dividends.
Disclosure: None.
