Top Food Stocks for Q4 2021

The food industry is comprised of companies that focus primarily on offering food and non-alcoholic 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).

Food stocks are best represented by the S&P Food & Beverage Select Industry Index, even though this index also includes companies that sell alcoholic beverages. The index has underperformed the broader market over the past 12 months, providing a total return of 22.7% as compared with 35.8% for the benchmark Russell 1000 Index as of Sept. 9, 2021. All statistics in the tables below are as of Sept. 9, 2021.

Here are the top 3 food stocks with the best value, the fastest growth, and the most momentum.

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 you’re paying less for each dollar of profit generated.

Source: YCharts

• Sprouts Farmers Market Inc.: Sprouts Farmers Market operates a chain of grocery stores selling meats, cheese, dairy products, bulk foods, baked goods, and vitamins and supplements. The company has locations throughout the U.S. On Aug. 31 the company announced that Lawrence “Chip” Molloy, currently a member of its board of directors, would become CFO of the company on Sept. 25, 2021. Molloy will succeed Denise Paulonis.
• SpartanNash Co.: SpartanNash provides wholesale and retail distribution services to retail customers including independent retailers, select national retailers, its own retail stores, and U.S. military commissaries. In late August the company announced a quarterly cash dividend of $0.20 per common share. The dividend will be paid on Sept. 30 to shareholders of record as of Sept. 15, 2021.
• Herbalife Nutrition Ltd.: Herbalife Nutrition is a nutrition company that sells meals, snacks and nutrition products, as well as weight management, fitness and sports products.

Fastest Growing Food Stocks

These are the top food stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.

Source: YCharts

• The Hain Celestial Group Inc.: The Hain Celestial Group is a maker of natural and organic beverages, snacks, specialty foods, and personal care products. The company sells grocery items including cookies, oils, snacks, and frozen foods, as well as organic body, skin, and hair products. For its Q4 FY 2021, ended June 30, 2021, the company reported a roughly 10-fold increase in net income on declining net sales YOY. Net sales declined the most in the company's North American business as compared to its International business over this period.
• 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.
• Sanderson Farms Inc.: Sanderson Farms processes and distributes both fresh and frozen chicken products and prepared food items. The company distributes its products to retailers, distributors, and fast food companies across the U.S. Sanderson's net income quintupled YOY for Q3 FY 2021, ended July 31, 2021. The company benefitted from factors including significantly improved demand and prices for products sold to food service 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

• Celsius Holdings Inc.: See company description above.
• 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 U.S.
• Darling Ingredients Inc.: Darling Ingredients serves the agri-food industry by recycling animal processing by-products and other natural materials. Darling repurposes these materials into products including tallow, yellow grease, and meat and bone meal. Net income attributable to Darling tripled on healthy net sales growth in Q2 2021. These figures were driven by strong performance in the company's global ingredients business.

The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.