7 Best Organic Food and Farming Stocks to Buy

3. Kellanova (NYSE:K)  

Number of Hedge Fund Holders: 45

Next on the list is Kellanova (NYSE:K). With a legacy of over 100 years, it boasts iconic brands like Pringles, Cheez-It, Pop-Tarts, and RXBAR. It also includes Kellogg’s (international), Eggo, and MorningStar Farms. In 2023, Kellanova achieved net sales of over $13 billion and operates in 180 markets with around 23,000 employees. One of its brands, Pure Organic, offers organic, gluten-free, non-GMO Project Verified, and vegan snacks.

In Q2 2024, Kellanova (NYSE:K) reported net sales of $3,192 million, reflecting a 4% organic growth. Adjusted operating profit surged 16%, with gross profit up 9% YoY. Nigeria played a key role in the company’s performance, accounting for nearly all of the global volume decline, due to price elasticity impacts following Q1 price increases. The devaluation of the Nigerian Naira negatively affected net sales.

Despite these challenges, Nigeria contributed to 16% organic sales growth in the region through strategic pricing. EPS came in at $1.01, surpassing analysts’ expectations, marking a 14% growth from the previous year.

In terms of liquidity, 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. Additionally, significant cash was returned to shareholders through dividends.

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. The deal is expected to be executed within the first half of 2025.

Kellanova’s share price surged 8.61% in the past month and 43.30% year-to-date, fueled by strong financial performance. It could also be partly linked to the use of AI, ML, and data analytics, which are optimizing operations and driving innovations like the Pringles Harvest Blends.

Declines in revenue, especially in Europe and Asia Pacific, were noted. Moreover, sales 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, remain bullish on the stock, as per Insider Monkey’s database. Considering the company’s performance and outlook, Kellanova is featured on our list of the Best Organic Food and Farming Stocks to Buy, despite analysts currently giving it a consensus hold rating.