We recently published a list of the 10 Best Food Stocks To Buy Under $20. In this article, we are going to take a look at where Herbalife Ltd. (NYSE:HLF) stands against other best food stocks to buy under $20.
Overview of the Global Food Industry
The food industry plays a significant role in regulating the global economy, affecting agriculture and retail. Food demand is growing with an increase in the world’s population, resulting in changes in consumption patterns. According to The Business Research Company, the global food and beverages market was valued at $6.57 trillion in 2023. It is anticipated to grow at a compound annual growth rate of 5.9% between 2024 and 2028, reaching $8.81 trillion by the end of the forecast period. In 2023, Asia-Pacific was the largest region in the food and beverages market.
Technological advancements are causing significant changes in how companies in food production operate. Innovations such as robotics and AI are streamlining supply chains and improving efficiency. Recent consumer spending trends also highlight a shift towards healthier and functional foods that support overall well-being. For instance, many consumers are now looking for products that satisfy hunger and promote health benefits at the same time, such as weight management and heart health.
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Are Food Prices Expected to Cool Down?
Inflation has simmered down over the past two years, according to CNBC. Although October and November saw a slight stall, prices for items such as cars, energy, and gasoline have all cooled down. However, food prices have continued to outpace inflation, rising by 28% since 2019. According to a 2024 survey by RR Donnelley, grocery price increases have left more than 85% of consumers frustrated and disturbed. More than a third of consumers reported shifting to buying fewer items to save money. Experts believe that trends surrounding higher food prices are likely to persist. CNBC reported that Claudia Sahm, a chief economist at New Century Advisors, was of the view that food prices tend to stay up once they rise. She said:
“The inflation may come back down, so you don’t see the big price increases. But outside of widespread depression, we don’t tend to see prices falling across the board.”
While policy interventions can affect food prices, experts are skeptical of the odds of that happening. CNBC reported that Jason Miller, a professor of supply chain management at Michigan State University, was of the opinion that government policymakers can do nothing about the situation. He said this was not unique to the United States, as the problem has been experienced worldwide. At present, there isn’t much to do except wait and see how things work out in the future.
Another factor behind the looming uncertainty about the future of food prices is the current political climate and its unpredictability. However, tariffs are expected to considerably increase the prices of things, especially food. CNBC reported that Rakeen Mabud, chief economist at Groundwork Collaborative, said the following when talking about the scenario:
“Same thing with mass deportations. We have workers in this country who really prop up our food system, and when you start to really harm that workforce and send them away, that harms our entire economy.”
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 20 food stocks with a share price under $20. We then selected the top 10 most popular stocks among elite hedge funds as of Q3 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment. Please note that the share price data is as of February 14, 2025.
Why do we care about what hedge funds do? 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 person enjoying a morning jog while sipping from a bottle of a functional beverage.
Herbalife Ltd. (NYSE:HLF)
Stock Price: $5.30
Number of Hedge Fund Holders: 32
Herbalife Ltd. (NYSE:HLF) is a global nutrition company that offers protein shakes, meal replacements such as soups and bars, high-protein snacks, teas, sports nutrition, and vitamins and supplements. It specializes in targeted nutrition, sports and fitness, energy, and weight management. Its snack portfolio comprises a range of savory, sweet, and creamy options, including snack shakes, high-protein iced coffee, soups, protein bars, and baking mixes. Herbalife Ltd. (NYSE:HLF) also manages a portfolio of dietary supplements, which includes solutions for digestive health, heart health, immunity, and more. The company sells its products in around 95 markets across the globe.
Its fiscal Q3 2024 results showed a 3.2% year-over-year drop in net sales to $1.2 billion, driven primarily by FX headwinds. Adjusted EBITDA stood at $167 million, with a margin of 13.4%, and exceeded the guidance range of $125 million to $155 million. Its reported EPS for the quarter was 57 cents, which beat expectations of 35 cents. The company is seeing substantial growth in new distributor members, a 14% increase from last year. This was the second consecutive quarter of year-over-year improvement. The surge was attributed to successful new initiatives to expand the brand’s market reach.
Strong cash generation has allowed Herbalife Ltd. (NYSE:HLF) to make significant progress in debt reduction. In fiscal Q3 2024, it had an operating cash flow of $100 million, of which $85 million was used to pay down debt, reducing the total leverage ratio to 3.3x. The move is part of the company’s overall strategy to lower its debt by $1 billion within five years.
Overall, HLF ranks first on our list of best food stocks to buy under $20. While we acknowledge the potential of HLF, our conviction lies in the belief that 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 HLF 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.
