In this article, we discuss the 10 best organic food and farming stocks to buy.
Organic food sales growth is surpassing conventional food sales growth according to a study. Between 2020 and 2021, the value of organic produce sales increased by 5.5% while conventional produce reported a growth of 1.9%.
The global organic food market was estimated at $178.4 billion in 2021 and is expected to reach almost $500 billion by 2030. During the forecasted period, the North American organic food market is estimated to grow at a CAGR of 12.8%. In Europe, the growth is expected to record a CAGR of 13.6% in the period.
With increasing demand, more and more companies are flocking toward organic food production each year. Some of these companies include The Kroger Co. (NYSE:KR), The Kraft Heinz Company (NASDAQ:KHC), and General Mills, Inc. (NYSE:GIS).
The Kroger Co. opened its organic produce segment in 2013, called Simple Truth. The company not only focuses on organic foods but also offers 100% plant-based alternatives such as meatless burger patties and meatless grinds.
Moreover, The Kraft Heinz Company launched Springboard Brands in 2016. Its main purpose is to find growing organic, natural, and “super-premium” food brands.
General Mills, Inc. is one of the companies that saw the potential of organic foods long before most of the players in the market. The company started offering organic products after the acquisition of Small Planet Foods in the year 2000. Since then, General Mills, Inc. has made several acquisitions over the years to expand its portfolio of organic foods.
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Our Methodology
After a careful assessment of the organic foods industry, we chose the ten best stocks among them. These stocks were chosen based on their fundamentals, financial history/forecasts, shareholder returns, and analyst ratings.
The hedge fund sentiment around each stock has been taken from Insider Monkey’s database of 920 elite hedge funds.
Best Organic Food and Farming Stocks To Buy
10. Adecoagro S.A. (NYSE:AGRO)
Number of Hedge Fund Holders: 11
Adecoagro S.A. (NYSE:AGRO) is an agro company with a range of businesses through which it plants, harvests, produces, and markets crops, organic fertilizers, dairy products, sugar, and more. Other than Luxembourg, its operations are based in Argentina, Uruguay, and Brazil.
On October 21, Adecoagro S.A. announced a semi-annual cash dividend of $0.16, paid out on November 17 to the shareholders of record on November 2. As of December 6, the company has a significant dividend yield of 4.16%.
In the third quarter, Adecoagro S.A. generated $378.14 million in revenue, up by more than 22.6%, and beat the analysts’ estimates by $142.14 million. The non-GAAP EPS reported was $0.43 while the adjusted EBITDA was $122.25 million. During the first ten months of the year, the corporation repurchased 3.6 million shares worth $29 million under its share buyback program.
On September 30, Itau BBA analyst Daniel Sasson initiated Adecoagro S.A. with an Outperform rating and a price target of $10.
The Kroger Co., The Kraft Heinz Company, and General Mills, Inc. are some of the best organic food and farming stocks along with Adecoagro S.A..
9. Dole plc (NYSE:DOLE)
Number of Hedge Fund Holders: 19
Dole plc (NYSE:DOLE) is one of the largest producers of conventional and organic fruits and vegetables. Since 1976, the company has partnered with The Walt Disney Company (NYSE:DIS) from time to time to market fresh produce to children across the United States. The latest partnership was announced in October.
Dole plc (NYSE:DOLE) started paying dividends at the end of 2021. The company is one of the best organic food and farming stocks due to its impressive dividend yield of 3.62% with an annualized dividend payout of $0.32. The next quarterly dividend of $0.08 is payable by January 6 to the shareholders of record on December 16.
In Q3 2022, 19 hedge funds held positions in Dole plc (NYSE:DOLE) at a combined value of $114.335 million, up from 18 in the previous quarter, valued at $108.792 million.
Here’s what Kingdom Capital Advisor specifically said about Dole plc (NYSE:DOLE) in its Q2 2022 investor letter:
“Dole plc (NYSE:DOLE): Dole continues to perplex. The company has executed well in the face of significant cost inflation, yet the share price has significantly declined. Greater investor familiarity with the stock should eventually lead to price recovery; you rarely see a defensive, well-known, industry leading brand trading anywhere near Dole’s current multiples. Two recent filings show some sophisticated investors share our view, with Taylor Farms and BDL Capital increasing their stakes in the business to over 5% ownership. Despite our conviction, Dole has remained one of the largest drags on our performance year to date.”
8. SunOpta Inc. (NASDAQ:STKL)
Number of Hedge Fund Holders: 20
SunOpta Inc. (NASDAQ:STKL) is an American multinational mineral and organic foods company. The company’s organic food segment produces grains and fruit-based products. It is one of the best organic food and farming stocks and as of December 5, SunOpta Inc. stock has been up by 22.36% year-to-date.
On October 11, SunOpta Inc. sold its sunflower and roasted snacks business for $16 million to Pacific Avenue Capital Partners.
In the third quarter, SunOpta Inc. was a part of 20 hedge fund portfolios. Oaktree Capital Management owned over 20.7 million shares, worth $188.509 million, and was the most notable stakeholder in the company in Q3.
On September 19, Cowen analyst Brian Holland named SunOpta Inc. as his top pick in the food sector and called it his preferred plant-based play. The analyst maintained an Outperform rating on the company shares with a $15 price target.
Diamond Hill Capital made the following comment about SunOpta Inc. in its Q3 2022 investor letter:
“On an individual holdings basis, top contributors to return included WESCO International, Mr. Cooper Group and SunOpta Inc.. SunOpta is a leading global company focused on natural food, ingredient sourcing, organic food, and specialty foods. Revenue growth has been driven by strong demand for its plant-based products, and the company’s pricing power has mitigated the impact of inflation.”
7. Herbalife Nutrition Ltd. (NYSE:HLF)
Number of Hedge Fund Holders: 24
Herbalife Nutrition Ltd. (NYSE:HLF) develops and markets nutrition solutions in the regions of North America, Mexico, South and Central America, Europe, the Middle East, Africa, Asia Pacific, and China.
On November 1, Citi analyst Chasen Bender maintained a Buy rating on Herbalife Nutrition Ltd.’s stock while reducing the price target from $30 to $26.
In the third quarter of 2022, 24 hedge funds held a stake worth $852.4 million in Herbalife Nutrition Ltd.. The most significant shareholder in the third quarter was Route One Investment Company with 10.8 million shares worth $215.72 million in Herbalife Nutrition Ltd..
Here is what Bronte Capital has to say about Herbalife Nutrition Ltd. in its Q3 2021 investor letter:
“Herbalife is – as we have discussed many times before – a multi-level marketing scheme selling weight-loss shakes. The idea is simple. If I replaced six meals a week with low-calorie protein shakes and I walked an extra 15km a week I would quickly lose 15-20kgs. It would be good for me. It is also well-nigh impossible to do.
One solution is to hire a personal trainer (usually of the opposite sex) and have them nag you. You will do tough stuff for an attractive member of the opposite sex. More realistically you could just have your friends nag you. And that is why this works so well as a multi-level marketing scheme. The person who sells you the shakes has an incentive to keep you on the diet.
We have looked at many distributors and we see a weight-loss program – implemented for (literally) millions of people – which works about as well as any weight-loss health program that ever existed. That still means it fails most of the time – but it works enough that we can be proud of owning this stock and the health benefits it provides. Herbalife, it turns out, grew well during COVID. This was initially a surprise to us – as we thought Herbalife depended on the personal touch to make the sale. But, instead, weight loss and associated social clubs moved online – and – in many cases were the main social outlet the customers had.”
6. Cal-Maine Foods, Inc. (NASDAQ:CALM)
Number of Hedge Fund Holders: 27
Cal-Maine Foods, Inc. (NASDAQ:CALM), with its private labels and brand names, is responsible for a quarter of U.S. egg consumption. It produces, grades, markets, and distributes specialty shell eggs like organic, brown, cage-free, and enriched eggs.
In the third quarter, the hedge fund sentiment was positive on Cal-Maine Foods, Inc.’s stock. 27 hedge funds were bullish on the stock, up from 22 funds in the prior quarter. In Q3, the combined value of the hedge fund positions in the company was $360.93 million.
On September 27, Cal-Maine Foods, Inc. increased its quarterly dividend by 13.3% when it announced a dividend of $0.85 per share. The dividend was paid out on November 10 to the shareholders of record on October 26.
Cal-Maine Foods, Inc. is a notable name among the best organic food and farming stocks in addition to The Kroger Co., The Kraft Heinz Company, and General Mills, Inc..
Diamond Hill Capital mentioned Cal-Maine Foods, Inc. in its third-quarter 2022 investor letter. Here is what it said:
“On an individual holdings’ basis, top contributors to return in Q3 included Cal-Maine Foods, Inc. and WESCO International. Tight hen supply tied to a bird flu outbreak has supported higher egg prices, a key driver for egg-producer Cal-Maine’s profitability. Outside of that exogenous event, Cal-Maine is well positioned amid an industry shift to cage-free eggs. Cal-Maine invested ahead of competitors in upgrading facilities — spending on its upgrades when inflation was lower — which we believe should prove an additional boon enabling ongoing share gains.”
5. Performance Food Group Company (NYSE:PFGC)
Number of Hedge Fund Holders: 33
Performance Food Group Company (NYSE:PFGC) is an American food distribution company. It sells organic foods, frozen foods, groceries, candies, snacks, beverages, tobacco products, meat products, health products, and beauty care. It is headquartered in Virginia and has around 35,000 employees.
Performance Food Group Company reported FQ1 results on November 9 and produced solid results. The adjusted diluted EPS of the company was $1.08, representing a 151.2% increase from the prior year period. The revenue increased by 41.72% to $14.72 billion, outperforming the estimates by over $279 million.
On November 14, after robust FQ1 2023 results, Deutsche Bank analyst Brian Mullan reiterated a Buy rating on Performance Food Group Company’s shares. Mullen raised his price target on the firm to $72 from $67.
Here is what ClearBridge Investments had to say about Performance Food Group Company in its Q4 2021 investor letter:
“Performance Food Group is another example of a quality franchise bought during a depressing period for the food service industry that has flexed its balance sheet to make acquisitions of weaker players and continues to consolidate its leading market share.”
4. Archer-Daniels-Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 37
Archer-Daniels-Midland Company (NYSE:ADM) is an Illinois-based food processing, commodities trading, and agriculture company. In the last three years, the company’s stock price has gained substantially. However, the company still remains fairly valued at a PE ratio of 12.65.
In the last 3 months, 5 analysts have covered Archer-Daniels-Midland Company with an average price target of $98.20 and a Moderate Buy rating. On October 26, Baird analyst Ben Kallo reaffirmed an Outperform rating on the company shares and raised his price target to $98 from $94.
Archer-Daniels-Midland Company has increased its dividend for the last 49 years and as of December 6, the company has a dividend yield of 1.75%. Furthermore, earlier this year, the company authorized a share repurchase program of $8 billion in addition to the $4 billion repurchase program authorized in May 2021. In the September quarter, Archer-Daniels-Midland Company repurchased stock worth $1 billion.
Diamond Hill Capital mentioned Archer-Daniels-Midland Company in its Q1 2022 investor letter. Here is what the firm has to say:
“ADM is a leading agricultural processor that also operates a global nutrition business focused on the development of ingredients and flavors for food and beverages, supplements and more. The company’s recent operating results have benefited (unfortunately) from the war in Ukraine as grain prices and agricultural markets globally experienced strong price increases. ADM is positioned well to benefit from the volatility due to its stable North American agricultural base.”
3. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 40
General Mills, Inc. is an American consumer foods company that operates through retail stores. The company is also one of the largest flour millers in the US. Its organic food segment includes frozen and shelf-stable vegetables. General Mills, Inc. is headquartered in Minnesota.
For the past 120 years, General Mills, Inc. has been paying quarterly dividends. The latest one was declared on November 14 at $0.54 per share, payable by February 1 and the company goes ex-dividend on January 9.
General Mills, Inc.’s coverage was initiated by Exane BNP Paribas analyst Max Gumport with an Overweight rating on November 15. The analyst set his price target at $90 and noted that the U.S. packaged food goods have historically outperformed the S&P downturns during a potential looming recession. Gumport specifically mentioned General Mills, Inc.’s Buffalo pet food brand and said that it has a significant runway.
Here is what Chartwell Investment Partners has to say about General Mills, Inc. in its Q2 2022 investor letter:
“In the Dividend Equity accounts, the three best performers in Q2 includes General Mills (NYSE:GIS, 3.2%), up 12.2%. General Mills benefitted from the combination of being in a very defensive industry as well as demonstrating solid business momentum; margins have been particularly impressive, following price increases.”
2. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 40
The Kraft Heinz Company is an American food company that offers its products worldwide. The company offers organic food products in the United States, Canada, and Europe.
Berkshire Hathaway owns over 26% shares of The Kraft Heinz Company with 325,634,818 shares, worth $10.86 billion.
On December 6, Deutsche Bank analyst Steve Powers reaffirmed a Buy rating on The Kraft Heinz Company and raised his price target to $49 from $47.
1. The Kroger Co. (NYSE:KR)
Number of Hedge Fund Holders: 49
The Kroger Co. is an American company that operates supermarkets and department stores in the United States. The company operates 33 food processing facilities and has a separate organic foods segment Simple Truth, making it one of the best organic foods and farming stocks. The segment reached a $3 billion revenue milestone in 2020.
Kroger Co. has increased its dividends for 15 consecutive years and has a 2.24% yield as of December 6. The company paid its latest dividend on December 1, to the shareholders of record on November 15.
On December 6, Bernstein analyst Dean Rosenblum initiated coverage on The Kroger Co. with an Outperform rating and a $58 price target.
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This article is originally published at Insider Monkey.
