Top Food Stocks for Q1 2022

The food industry is composed of companies that focus primarily on offering food and nonalcoholic beverage products. It includes grocery stores, food distribution companies, and other companies offering consumer staples that consumers either eat or drink. It does not include restaurant businesses, many of which are considered cyclical because consumers tend to dine out less during economic slumps.

Companies in the food industry include The Kroger Co. (KR), Darling Ingredients Inc. (DAR), and B&G Foods Inc. (BGS).

The food sector, as represented by the S&P Food & Beverage Select Industry Index, has underperformed the broader market, with a one-year trailing return of 12.7% compared with 24.3% for the Russell 1000 Index, as of Dec. 6, 2021.

Here are the top three food stocks with the best value, the fastest growth, and the most momentum. All numbers in the tables below are as of Dec. 7, 2021.

Best Value Food Stocks

These are the food stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.

Source: YCharts

• Tesco PLC: Tesco is a U.K.-based retailer with stores primarily in the United Kingdom and Europe. It also offers online retailing. In November 2021, the company announced its first closed loop grocery Media and Insight platform. The platform is powered by data science leaders dunnhumby. It’s expected to enable brands to sharply boost their understanding of shoppers and help suppliers and agencies engage more effectively with Tesco customers.
• Sendas Distribuidora S.A.: Sendas Distribuidora is a Brazil-based food distribution company. It operates through both retail and wholesale outlets, selling products such as food, household products, clothes, and beverages. Its wholesale stores are self-operated and carry the brand name Assai. The retail segment is operated through supermarkets and convenience shops.
• WH Group Ltd.: WH Group is a Chinese company that operates in various segments of the global pork industry, mainly in the United States and China, and is involved in packaging, marketing, and distribution. Smithfield is one of its major U.S. brands. In its interim 2021 report as of June 30, 2021, WH Group reported a small decline in profit even as it posted increases in revenue, and rising sales of packaged meats and pork.

Fastest Growing Food Stocks

These are the food stocks with the highest year-over-year (YOY) sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue through organic or new ways, as well as find growing companies that have not yet reached profitability. In addition, earnings per share (EPS) can be significantly influenced by accounting factors that may not reflect the overall strength of the business.

However, sales growth can also be potentially misleading about the strength of a business, because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability.

Source: YCharts

• Utz Brands Inc.: Utz Brands produces potato chips, party mixes, pretzels, cheese snacks, veggie snacks, and other items for U.S. consumers. Its popular brand names include Utz, Zapps, and Boulder Canyon. In the third quarter (Q3) of 2021, it posted net income of $31.4 million, compared with a net loss in Q3 2020. Net sales increased by 26.1% YOY.
• Celsius Holdings Inc.: Celsius is a holding company that develops, sells, and distributes a variety of calorie-burning beverages. It sells through multiple channels, including grocery, drug, convenience, and nutrition stores, as well as gyms.
• ARKO Corp.: ARKO is a U.S. convenience store chain with 169 stores across 33 states and the District of Columbia. For Q3 2021, announced on Nov. 10, 2021, the company said net income more than doubled to a quarterly record, as revenue posted solid gains in the wake of the disruption caused by the COVID-19 pandemic last year. ARKO also reported strong merchandise sales margins. On Dec. 6, 2021, ARKO subsidiary GPM Investments LLC announced a partnership with global pizza chain Sbarro. As a result, four Village Pantry stores in Indiana will offer Sbarro’s pizza to GPM customers.

Food Stocks with the Most Momentum

These are the food stocks that had the highest total return over the last 12 months.

Source: YCharts

• America Great Health: America Great Health produces healthcare products, health food and skincare products, and aging and preventive health solutions, among others. The company is also involved in proton therapy, as well as regenerative medicine research through its centers.
• United Natural Foods Inc.: United Natural Foods is a distributor of health and specialty foods and nonfoods. Through its wholesale operations, it distributes organic and conventional groceries and food products. It sells health, food, and nonfood products through its retail locations. The company’s debt got recent credit rating upgrades by Moody’s Investors Service and S&P Global.
• Albertsons Companies Inc.: Albertsons Companies operates a chain of grocery stores selling produce, canned items, baked goods, and other food products. The company serves customers across the United States. For Q2 of fiscal year (FY) 2021, announced on Oct. 18, 2021, the company reported a small increase in net income as net sales and other revenue rose 4.4% YOY to $16.5 billion.

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