In this article, we will discuss the 7 Best Confectionery, Cookie, and Snack Stocks To Buy.
Snacks Market
Just like the rest of the global economy, the snacks market is also undergoing the effects of inflation. The average price of potato chips in June 2024 was $6.56, compared to $5.09 in June 2020, according to Federal Reserve data.
Thus, major players in this sector are reporting revenue drops in their snack segment, due to price increases following years of inflation. Tightened household budgets have made consumers more value-conscious, reducing demand for snacks. This shift has led major players to consider cost-cutting measures and increase promotions for brands like Lay’s and Doritos.
Although inflation has slowed, American customers have yet to recover from higher everyday prices, leading to trends like ‘shrinkflation’ (cutting down products’ sizes for cost-savings) and more consumers opting for private-label brands or buying fewer snacks. In recent months, several major retailers have announced price cuts, a trend that could continue as consumers become more cautious, according to CNN.
Moreover, bigger market players are focusing on offering a broader range of price options, promoting cheaper products through a variety of multipacks, and increasing in-store marketing. Thus, macro factors, such as inflation and consumer restraint, continue to shape the snack industry, pushing companies to offer better value to retain brand loyalty.
Confectionery Sector
In contrast, the confectionery sector saw a modest 2.66% year-to-date (YTD) increase compared to the broader market’s 17.22% rise. Rising input costs, particularly for cocoa, have driven up prices, with cocoa tripling in the past 12 months due to crop diseases in West Africa, according to a report by Food & Drink Digital.
Similar to the snack market, the confectionery sector, which includes chocolates, candied fruits and nuts, sugar candies, and chewing gum, has also experienced a shift toward private-label brands and smaller pack sizes, as price-sensitive consumers, especially in lower-income groups, adjust their buying habits. Broader economic challenges, including persistent inflation, high interest rates, and reduced consumer confidence continue to affect both the snack and confectionery markets.
Market Outlook
Nevertheless, the snack industry is experiencing significant growth, driven by consumer demand for convenience and healthier eating options. According to Information Resources, Inc. (IRI), snacking has increased by 27% over the past five years, contributing $6 billion to the overall food industry.
Moreover, the snack food market is seeing a growing demand for vegan and allergen-free snacks, driven by health-conscious consumers, especially millennials and Gen Z, who are snacking more than three times a day and replacing meals with snacks. Spicy and complex flavors like ghost pepper and sweet flavors are trending, along with global flavors from Latin America, Asia, and the Middle East. In the U.S., popular snack options include Rice Krispies, Doritos, and Fritos.
On the other hand, the U.S. confectionery sector, which remains a global trendsetter, saw its market value rise to $48 billion over the past year, largely due to inflationary pressures, according to a recent report by Confectionery Production.
Manufacturers are using unique ingredients like tropical fruits and organic herbs to stand out, while innovations like Barry Callebaut’s ruby chocolate are gaining traction. Millennials are driving demand for premium and organic confectionery, with products like YumEarth’s Organic Candy Corn. Pistachio-based treats are also gaining popularity, with brands like Lindt and Ritter Sport introducing new products.
Also, the global cookie market stood at $28.36 billion in 2023, and is projected to grow at a CAGR of 6.82% till 2028, according to technavio. Furthermore, the study highlighted that North America is going to account for 34% of this growth. Oreo, which is marketed in more than 100 countries, is the best-seller globally.
Thus, many investors today are looking to cash in on major companies operating within confectionery, cookie, and snack markets. In light of this, we have compiled a list of the best confectionary, cookie, and snack stock to buy today.
With this, let’s now move on to our list of the 7 Best Confectionery, Cookie, and Snack Stocks To Buy.
A hand reaching out to grab a packet of confectionery products from an overflowing display shelf.
Methodology:
For this list, we scanned Insider Monkey’s Q2 2024 database and selected companies involved in the snacking, confectionery, and cookies industry, focusing on areas relevant to snack and confectionery production and distribution. From that group, we picked 7 companies with strong balance sheets and solid financials and ranked them in ascending order of hedge funds having stakes in them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
7. Flowers Foods, Inc. (NYSE:FLO)
Number of Hedge Fund Holders: 26
Flowers Foods, Inc. (NYSE:FLO) is one of the leading producers of packaged bakery goods in the United States, generating $5.1 billion in sales in 2023. Some of its top brands include Nature’s Own, Dave’s Killer Bread, Wonder, Canyon Bakehouse, and Tastykake. The Tastykake brand is well-known for its extensive lineup of snack cakes, pies, and donuts, featuring iconic favorites like Krimpets, Kandy Kakes, and Juniors.
In Q2 2024, net sales for Flowers Foods, Inc. (NYSE:FLO) decreased by 0.2% to $1.225 billion, driven by a 1.2% decline in volume. The sales were partially offset by a 1.0% increase in pricing/mix. Branded retail sales grew by $2.3 million, primarily driven by snacking category, especially DKB snack bars.
Other sales dropped $5.4 million due to the exit from lower-margin foodservice. However, profit margin saw an uptick, rising to 5.5% from 5.2% last year, due to improved production efficiencies.
Furthermore, Flowers Foods, Inc. (NYSE:FLO) demonstrated improved liquidity as the company held $6.9 million in cash and cash equivalents by the end of the quarter. Dividends paid to shareholders rose by $3.8 million, totaling $101.9 million.
In terms of price movement, Flowers Foods’ stock rose 3.39% in the past month and 4.78% YTD, boosted by a 4.3% dividend increase in May 2024, which marked its 88th consecutive quarterly dividend. Consistent dividend growth reflects the company’s financial stability and boosts its investors’ confidence.
In a recent earnings call, Flowers Foods, Inc. (NYSE:FLO) highlighted plans to expand its branded retail business, focusing on Dave’s Killer Bread and Canyon Bakehouse. It also aims to tap into underpenetrated markets, particularly in the Northeast and Midwest.
At the end of Q2 2024, 26 hedge funds have invested $269 million in the company, as per Insider Monkey’s database, earning Flowers Foods, Inc. a spot on our list of the best food stocks.
6. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 29
General Mills, Inc. (NYSE:GIS), based in Minneapolis, MN, is a leading manufacturer and marketer of branded consumer foods sold in retail stores. The company operates across several segments, and its product portfolio includes snacks, snack bars, fruit and savory snacks, frozen desserts, cereals, convenient meals, pet food, refrigerated and frozen dough, ingredients, yogurt, and ice cream.
In Q4 2024, General Mills, Inc. (NYSE:GIS) reported a 6% decline in net sales to $4.7 billion compared to the same quarter last year, driven by unfavorable pricing, mix, and lower volume. Due to same factors, organic net sales also dropped by 6%.
In terms of segments, North America Retail, which includes ready-to-eat cereals, refrigerated yogurt, snack bars, fruit snacks, savory snacks, and more, saw a decline of 7%. Overall, the gross margin improved by 140 basis points to 35.8%, due to cost savings and supply chain improvements, despite cost inflation.
Operating profit decreased by 5% to $779 million, impacted by impairments but partially offset by lower SG&A expenses and restructuring charges. Net earnings fell by 9% to $558 million, mainly due to higher interest expenses and tax rates. However, the company reported an EPS of $1.01, beating analysts’ expectations of $0.993.
Despite the reduced profitability in the quarter, General Mills, Inc. (NYSE:GIS) generated $3.3 billion in operating cash flow for fiscal 2024, a significant increase from $2.8 billion the previous year. Also, the company invested $774 million in capital and repurchased $2.0 billion worth of shares. Dividends increased by 6% to $1.4 billion, with free cash flow conversion at 96% of adjusted after-tax earnings.
In April 2024, General Mills, Inc. (NYSE:GIS) opened a new warehouse in Belvidere to consolidate smaller facilities, boost distribution capacity, and support the Pleasant Street plant. As such, the stock rose 8.21% in the past month and 15.62% YTD.
Despite weaker net earnings, General Mills, Inc. (NYSE:GIS) is optimistic about volume improvements in fiscal 2025, focusing on product innovation and enhanced consumer experiences to drive organic sales growth.
As of Q2 2024, 29 hedge funds, holding a combined investment of $357 million, are bullish on the stock, according to Insider Monkey’s database.
5. The J. M. Smucker Company (NYSE:SJM)
Number of Hedge Fund Holders: 34
The J. M. Smucker Company (NYSE:SJM) offers a diverse portfolio of trusted brands across North America. The company leads in various categories, including coffee, peanut butter, fruit spreads, frozen handheld snacks, sweet baked goods, dog snacks, and cat food. Their well-known brands, such as Folgers, Dunkin’, Café Bustelo, Jif, Uncrustables, Smucker’s, Hostess, Voortman, Milk-Bone, and Meow Mix, are relied upon by families every day.
In Q1 2025, The J. M. Smucker Company (NYSE:SJM) experienced a net sales increase of $319.9 million, or 18%, primarily driven by the acquisition of Hostess Brands. Excluding the acquisition and other noncomparable factors, net sales growth was a modest 1%. Higher pricing in segments such as International and U.S. Frozen Handheld was offset by lower pricing in U.S. Retail Pet Foods and U.S. Retail Coffee.
Overall, the net sales growth reflects the company’s strategic acquisitions and brand strength, particularly with Hostess Brands. Therefore, the Sweet Baked Snacks segment, which includes snack and confectionery brands like Hostess and Voortman, reported a profit margin of 22.3%.
On the other hand, cash flow from operations dropped to $172.9 million from $217.9 million in the same period last year, and free cash flow fell to $49.2 million, reflecting tighter liquidity. Despite this, the company’s board approved a 2% dividend increase, marking 23 years of consecutive dividend growth, which makes SJM one of the best food stocks on our list.
In August 2024, Voortman Bakery, part of J. M. Smucker Company (NYSE:SJM)’s sweet-baked snacks division, is launching Fall Favorites Cookies and Pumpkin Spice Wafers for a limited time. These products align with the company’s strategy to meet seasonal trends and consumer preferences.
Although the stock rose 1.56% in the past month, it is down 4.90% YTD due to inflation and lower discretionary income. Organic sales growth was flat without acquisition boosts, highlighting the need for core operational improvements.
Analysts are optimistic about the stock, projecting an upside potential of 7.60%. As of Q2 2024, 34 hedge funds, holding a combined investment of $844 million, are bullish on the stock, as per Insider Monkey’s database.
4. The Hershey Company (NYSE:HSY)
Number of Hedge Fund Holders: 39
The Hershey Company (NYSE:HSY) produces and markets chocolate, sweets, and snacks through three segments: North America Confectionery, North America Salty Snacks, and International. The company now employs 20,000 people in the U.S. and operates in 80 countries, with a wide range of products including chocolate, non-chocolate confectionery, gum, mints, protein bars, baking ingredients, snack items, and spreads. It is among the best food stocks on our list.
In Q2 2024, The Hershey Company’s (NYSE:HSY) consolidated net sales declined by 16.7% to $2.07 billion. This downturn was primarily driven by inventory reductions across North America Confectionery and International segments, largely due to the implementation of a new ERP system, along with unfavorable shipment timings.
Despite the overall decline in sales, The Hershey Company (NYSE:HSY)’s Salty Snacks portfolio showed positive momentum, with Dot’s Homestyle Pretzels retail sales increasing by 42.3% in the quarter. Gross margin was hit hard, falling to 40.2% from 45.5% due to higher costs and inefficiencies, with operating profit also declining.
Nevertheless, Hershey remains committed to strategic investments, with projected capital expenditures between $600 million and $625 million for 2024. The ongoing implementation of a new ERP system and product innovations in the second half of 2024 are expected to energize key categories and support long-term growth.
The Hershey Company (NYSE:HSY) is focusing on sustainability and social impact through its Cocoa For Good strategy. The company has already reduced emissions by 43% and aims for 50% by 2030, while eliminating 1.7 million pounds of packaging, and accelerating its deforestation commitment to 2025.
Hershey’s stock saw a 0.40% uptick in the past month and a 7.69% YTD increase. Despite revenue and earnings declines, investments in marketing and consumer engagements have bolstered market share. Moreover, strategic investments in digital infrastructure and commitment to innovation offer a promising foundation for future growth.
Additionally, 39 hedge funds have invested $506 million in the company at the end of Q2 2024, as per Insider Monkey’s database. Among these, Holocene Advisors was the company’s leading stakeholder in Q2.
3. Kellanova (NYSE:K)
Number of Hedge Fund Holders: 45
Kellanova (NYSE:K) is known for its iconic brands such as Pringles, Cheez-It, Pop-Tarts, RXBAR, Kellogg’s (international), Eggo, and MorningStar Farms. It operates in 180 markets, with principal products including crackers, crisps, savory snacks, toaster pastries, cereal bars, ready-to-eat cereals, frozen waffles, veggie foods, and noodles.
In Q2 2024, Kellanova’s (NYSE:K) reported net sales of $3.19 billion, reflecting a 4% organic growth. Adjusted operating profit surged 16%, with gross profit up 9% YoY. In Snacks segment, net sales grew organically by about 13% year-on-year with broad-based growth across the region led by Pringles.
Nigeria, despite volume declines due to price elasticity and currency devaluation, contributed 16% regional organic sales growth. EPS came in at $1.01, surpassing analysts’ expectations, marking a 14% growth from the previous year.
Moreover, Kellanova’s (NYSE:K) cash flow generation remained strong. The company experienced a YoY increase in free cash flow and maintained debt leverage below target. They also raised their free cash flow outlook to over $1 billion, driven by robust operating profit.
On August 14, an announcement was made that Mars would acquire Kellanova for $36 billion. This acquisition is set to transform Mars into a leading player in the global snacking market, expanding its presence in both sweet and savory categories.
Furthermore, Kellanova’s share price surged 8.61% over the past month and 43.30% YTD, driven by strong financial performance and its acquisition by Mars. It could also be partly linked to the use of AI and ML, which are optimizing its operations and driving innovations.
However, declines in revenue, especially in Europe and Asia Pacific, were noted. Overall, it declined 4.7% YoY due to currency fluctuations and the divestiture of its Russia business. Despite these challenges, the company raised its 2024 guidance, signaling a positive outlook.
As of Q2 2024, 45 hedge funds, with a combined investment of $2.1 billion, remained bullish on the stock, as per Insider Monkey’s database. Considering the company’s performance and outlook, Kellanova (NYSE:K) is featured on our list of the best confectionery, cookie, and snack stocks to buy.
2. Mondelez International, Inc. (NASDAQ:MDLZ)
Number of Hedge Fund Holders: 47
Mondelez International, Inc. (Nasdaq:MDLZ) is a global powerhouse in the snacking industry, serving over 150 countries worldwide. The company boasts well-known brands, including Ritz, LU, Clif Bar, and Tate’s Bake Shop, alongside beloved chocolates like Cadbury Dairy Milk, Milka, Toblerone, and Oreo.
In Q2 2024, Mondelez International, Inc. (NASDAQ:MDLZ) reported a 1.9% dip in net revenue to $2.8 billion, largely due to unfavorable currency impacts and the 2023 divestiture of its gum business. However, organic net revenue grew by 2.5%, driven by effective pricing strategies. EPS rose 25% to $0.86, boosted by product innovations and strong investments in emerging markets. Revenue growth in emerging markets was solid at 4.5%, while developed markets grew by 1.2%, supported by rising consumer confidence.
Furthermore, free cash flow generated was $1.5 billion, showcasing a healthy liquidity position that enabled Mondelez International, Inc. (Nasdaq:MDLZ) to raise its dividend by 11%, which makes MDLZ one of the best food stocks on our list. Looking forward, the company plans to strengthen its core categories—chocolate, biscuits, and baked snacks.
In September 2024, Mondelez International, Inc. (Nasdaq:MDLZ) announced the selection of 10 companies for its second CoLab Tech accelerator program, focusing on innovative technologies in snacking. These include advancements in cocoa processing, well-being snacks, sustainable packaging, and sensory experiences.
Now turning to price movement, the stock experienced a 9.46% increase over the past month and a 4.06% rise YTD. This growth is largely due to the company’s strategic divestitures and acquisitions. Additionally, cost-saving measures under the Simplify to Grow Program further strengthen the company’s position for continued growth.
Despite strong Q2 results, Mondelez International, Inc. (Nasdaq:MDLZ) faces challenges with the U.S. biscuit segment softness, rising cocoa costs, and competitive pressures in markets like India, which may impact profitability going forward.
However, analysts have projected an upside potential of 5.68% from the current price of $75.31. As of Q2 2024, 47 hedge funds, holding a combined investment of $1.6 billion, remained bullish on the stock, as per Insider Monkey’s database.
1. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 65
PepsiCo, Inc. (NASDAQ:PEP) is a global food and beverage company. Its products are consumed over one billion times daily in more than 200 countries. The company owns popular brands like Lay’s, Doritos, Cheetos, Gatorade, Pepsi-Cola, and Mountain Dew. The FLNA segment includes leading snack brands such as Lay’s, Doritos, Cheetos, and Ruffles in the U.S. and Canada.
In Q2 2024, PepsiCo, Inc. (NASDAQ:PEP) reported net revenues of $22.5 billion, an uptick of 0.8% YoY and 1.5% YTD. Frito-Lay North America saw a slight decline due to inflationary pressures, while Quaker Foods dropped 18% due to product recalls. However, PepsiCo Beverages North America gained 1%, driven by zero-sugar variants and new flavor extensions of Pepsi and Mountain Dew.
International organic revenue increased by 5.5%, with strong performance from the Europe and AMESA divisions. The company’s focus on local preferences and cost management boosted gross profit by 3.2% to $12.6 billion, with operating income up 10.6% to $4 billion. Adjusted EPS of $2.28 surpassed expectations.
PepsiCo, Inc. (NASDAQ:PEP)’s $6.4 billion in cash and equivalents and $8.2 billion planned returns to shareholders demonstrate solid financial health. Looking ahead, the company projects a 4% organic revenue growth for FY24 and an 8% increase in core EPS, underpinned by strategic cost-saving initiatives.
Notably, the company’s reliance on international growth raises questions about the sustainability of its growth in North America. PepsiCo, Inc. (NASDAQ:PEP)’s modest 1% gain in the beverages segment also highlights challenges, potentially impacting long-term growth if not addressed.
The company’s recent developments include expanding product offerings with smaller packaging for convenience, investing in zero-sugar beverages, and launching sustainable packaging options.
In terms of price movement, PEP saw an upsurge of 3.33% over the month and 4.61% YTD. PepsiCo’s strong international growth and disciplined cost management provide reasons to remain optimistic about the company’s future upside potential.
Analysts are optimistic about the stock, projecting an upside potential of 4.88%. As of Q2 2024, 65 hedge funds, with a combined investment of $4.3 billion, remained bullish on the stock, as per Insider Monkey’s database.
PEP is the Best Confectionery, Cookie, and Snack Stocks To Buy based on hedge fund sentiment. But our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PEP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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