We recently compiled a list of the 9 Best Pizza Stocks to Buy Now. In this article, we are going to take a look at where The Chefs’ Warehouse, Inc. (NASDAQ:CHEF) stands against the other pizza stocks.
How’s the Pizza Market Doing?
Originating from Italy hundreds of years ago, and spreading across the globe like wildfire ever since, pizza has always been the consumers’ go-to food option, and hence, its market is growing to date. As such, as reported in one of our articles on best pizza stocks to buy, the pizza market is set to experience a CAGR of 4.45% during the period 2024-2032, growing from $148.6 billion in 2023 to $222.5 billion by 2032. Similarly, the frozen pizza segment is also expected to increase during the period 2023-2028, gathering a market size of $5.96 billion during the period, showcasing a CAGR of 4.96%.
The popularity of pizza can be judged from the statistics showing that there are 245,000 pizza restaurants in the world, and around 77,000 restaurants within the U.S. The U.S. itself experienced record-high pizza sales of $46.9 billion in 2022, thanks to over 7,000 units opening up in the eight years up till 2022. This reinforces the fact that the largest pizza chains in the world are based in the U.S. Pizza Hut, one of the biggest pizza brands in the world, is the oldest one, which was founded back in 1958 in Kansas, USA.
What’s Cooking in the Industry?
Within the frozen pizza segment, meat toppings dominate the market as it has a share of 56% in sales, while vegetable toppings have a share of 26%. In contrast, cheese toppings are also competing nicely, as it has a 14% share, as reported by media.market.us. DiGiorno, Red Baron, and Totino’s Party Pizza are the top frozen pizza brands with the greatest brand awareness.
The recent trends in the pizza market include rising demand for vegan pizzas (frozen or otherwise); this evolving market of pizza has got is on a roll, as new demands keep popping up for cheese substitutes, all sorts of pepperoni, Mexican style meats like Birria and chorizo, and new topping varieties
What’s new in the industry is the rapid acceleration of technology use in the context of operators, as a survey shows that 748 pizza makers in the U.S. find online ordering the new go-to way of consuming pizzas and that 78.21% of the producers are investing in a great deal to up their brand presence across the internet. The optimism is on the high side as well amongst the pizza makers as most believe in sales growth in the next twelve months.
Thus, certainly, the pizza market is one to grow indefinitely (or at least it should), and hence, to capitalize on this growth, one must know the best pizza stock to buy. So, let’s move on to our list of 9 Best Pizza Stocks to Buy Now.
Methodology
To curate our list of 9 Best Pizza Stocks to Buy Now, we gathered a list of all companies with a significant presence in the pizza industry and related industries of cheese and flour. We then further narrowed them down on the basis of various metrics like institutional ownership, the number of analysts watching the stock, and the overall financial health of respective stocks. We ranked the finest remaining companies by the number of hedge funds that had stake in them as of Q2, 2024.
At Insider Monkey, we are obsessed with 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).
A farmer harvesting truffles in the countryside, ready to be shipped to customers.
The Chefs’ Warehouse, Inc. (NASDAQ:CHEF)
Number of Hedge Fund Holders: 18
Upside Potential: 30.92%
Based in the U.S., The Chefs’ Warehouse, Inc. (NASDAQ:CHEF) is a distributor of specialty food categories like cheese, unique oils, cooking oil, butter, chocolate, milk, flour, cut beef, and hormone-free poultry, just to name a few.
The Chefs’ Warehouse, Inc. (NASDAQ:CHEF)’s second quarter of 2024 was marked by robust operational efficiency bringing recovery to the operations. The company’s revenue saw an uptick of 8.3% on a YoY basis, hitting $954.7 million. This was a result of a 7.2% increase in organic sales, and a further 1% uptick coming through acquisitions. Furthermore, the company’s effective pricing strategies and expansion of its customer base helped it bag a 7.5% increase in specialty sales. Gross profit climbed 9.9% to $229 million, achieving a margin of 24%. Operating profit also climbed from $25.3 million to $33.9 million, on a YoY basis.
The growth of the company is commendable over the years, as it has expanded its distribution capacity by 60% since 2019, tapping into markets of UAE, Washington, California, and Florida. According to the company, it is well on track to generating a revenue of $4.6-$5 billion, and an adjusted EBITDA in the range of $300 million to $350 million. These ambitious goals can be demonstrated through the company’s successful installation of a protein processing center in Northern California already, and its plan of full consolidation of processing and distribution operations in Brisbane.
As a result of this showcasing of continued growth over the years, analysts are predicting a 3% growth in the company’s revenue in 2024, expecting it to hit $3.8 billion. The analysts are also predicting a 21% increase in the earnings. Thus, based on these forecasts, the analysts are translating this growth into the stock’s appreciation which they expect to be 30.9%; this forecast is given out by a consensus of seven analysts.
Lastly, 18 hedge funds are bullish on the stock as of Q2 2024, which is an increase by two from the prior quarter.
Overall CHEF ranks 9th on our list of the best pizza stocks to buy. While we acknowledge the potential of CHEF as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than CHEF 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.
