We recently published a list of 10 High Growth Food Stocks to Buy. In this article, we are going to take a look at where US Foods Holding Corp. (NYSE:USFD) stands against other high growth food stocks to buy.
The global food industry has always stimulated economic growth, innovation, and a shift in consumer trends. It is projected to reach $2.2 trillion by 2032 from its market size of $1.64 trillion in 2022, at a compound annual growth rate (CAGR) of 2.99%, according to Market Research Future. Despite food being a necessity, the business dynamics within the food industry are very complex and companies must be adaptable as they navigate the complexities of rising production costs, changing consumer preferences, and global supply chain disruptions.
Within the industry, inflation remains a key topic. While it was soaring in 2022, food prices have since declined. However, they are on the rise again, causing financial strain on both consumers and businesses. As reported by the U.S. Department of Agriculture (USDA) in December 2024, grocery prices went up by 1.8% compared to the previous year, and food-away-from-home costs increased to 3.6%. Especially staple food items, including eggs and beef, had a sharp rise due to the avian flu wave and the supply limitations. These price fluctuations create a challenge for food companies, which must adjust their pricing strategies without sacrificing demand or alienating customers.
On the other hand, consumer behavior is also changing, putting forth factors like health, sustainability, and convenience. Thus, specialty stores have seen an increase in the demand for fresh and raw food. At the same time, budget-conscious shoppers are gravitating toward discount retailers, highlighting the growing importance of affordability. Thus, food companies must meet diverse consumer needs driven by the dual trend of seeking premium and value-oriented products.
Furthermore, technological breakthroughs are also contributing to the industry’s transformation. Supply chain optimization, waste reduction, and increased production efficiency are being greatly aided by automation and artificial intelligence (AI). Moreover, robotics is deployed in food processing to increase production and efficiency, while AI-driven demand forecasting helps avoid inventory problems. Consumers’ growing need for convenience is being met by the usage of digital ordering and delivery platforms, which opens new avenues for revenue growth. By adopting these technologies, companies are keen to improve operations and take advantage of growth opportunities in a market that is constantly evolving.
Even with economic instability, the future of the food industry is promising, driven by global population growth, urbanization, and the expanding middle class in emerging markets. In addition, new investment opportunities are being created by the popularity of plant-based meals and alternative proteins. Thus, big industry players are prioritizing the integration of technology, sustainability, and innovation in their business model to capitalize on future growth potential.
Many stocks stand out for their capacity to capitalize on this growth potential.
Methodology
To curate our list of the 10 High Growth Food Stocks to Buy, we used Finviz stock screener to gather stocks within the food sector with a strong market capitalization. We then narrowed the list based on each company’s five-year compound annual growth rate (CAGR) to identify those demonstrating consistent revenue expansion.
Furthermore, we also considered the number of hedge funds holding stakes in each stock, using data from Insider Monkey’s hedge fund database, which tracks the activity of 1,009 hedge funds.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A loading dock filled with dry goods and frozen food being loaded onto a truck.
US Foods Holding Corp. (NYSE:USFD)
Number of Hedge Funds Holders: 52
5-year Revenue CAGR: 8.25%
US Foods Holding Corp. (NYSE:USFD) is a world-renowned company, serving independent restaurants, healthcare facilities, and the hospitality sector in the U.S. The company has established a strong market position by combining operational efficiencies, digital advancements, and strategic acquisitions.
US Foods Holding Corp. (NYSE:USFD) reported strong financial results for the fiscal year ended December 28, 2024, with adjusted EBITDA of $1.74 billion and a 4.6% margin. Adjusted EPS, on the other hand, increased by 20% to $3.15, while net sales grew 6.4% to $37.9 billion, driven by strong case volume growth. Furthermore, healthcare volumes increased by 4.7%, while the hospitality and independent restaurant cases increased by 2.4%, and 3.2%, respectively.
On top of that, US Foods Holding Corp. (NYSE:USFD) is concentrated on maintaining its momentum through operational improvements and digital transformation. Its MOXe (all-in-one e-commerce portal) platform has driven e-commerce penetration to 77% among independent customers, whereas the Pronto delivery service expanded to 40 markets for more frequent deliveries. The implementation of Descartes routing technology optimized routes, reducing costs, and increasing efficiency. In addition, private-label penetration among independent restaurants grew to 53%, boosting profits.
Furthermore, strategic purchases have also been crucial in US Foods’ expansion plan. The company completed the $220 million acquisition of IWC in 2024 and recently acquired Jake’s Finer Foods in Houston, which significantly expanded its distribution network. These acquisitions not only increased US Foods Holding Corp. (NYSE:USFD)’s reach but also added a high-quality meat-cutting facility to its Stock Yards network, bolstering its market position. Moreover, the company showed well-balanced capital allocation by repurchasing nearly $1 billion in shares over the year, demonstrating its commitment to long-term value creation.
On the other hand, US Foods Holding Corp. (NYSE:USFD)’s share price has risen 24.65% in the last six months, demonstrating the market’s confidence in the company’s future potential. With a firm foundation in place, the company is poised for long-term profitability and growth, allowing it to make it to our list of the 10 High Growth Food Stocks to Buy.
Overall, USFD ranks 9th on our list of high growth food stocks to buy. While we acknowledge the potential of USFD as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than USFD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
