Top Food Stocks for Q3 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 slightly outperformed the broader market over the past 12 months, providing a total return of 36.5% as compared with 34.8% for the Russell 1000 as of June 8, 2021. All statistics in the tables below are as of June 8, 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

• Tesco PLC: Tesco is a U.K.-based food retailer. Through subsidiaries, the company sells through online and brick and mortar supermarkets, as well as a private-label brand of products. The company has operations in Europe and Asia.
• JBS SA: Brazil-based JBS is a global meat processing company, including beef, pork, lamb, and chicken. The Brazil-based company posted net income of $2 billion reals (about $400 million) on record revenue for Q1 2021. JBS saw strong growth across multiple segments. The company on June 9 revealed that it had paid an $11 million ransom, previously undisclosed, to cybercriminals who had hacked its computer systems and disrupted its U.S. and Australian meat operations in early June.
• 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. On June 1, the company announced the appointment of Douglas Hacker as chairman following the retirement of Dennis Eidson. Hacker was the board's lead director from 2018 to June of this year.

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

• 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.
• The Very Good Food Co. Inc.: Canada-based The Very Good Food Co. develops, produces, and sells plant-based meat products. The company serves customers in the U.S. and Canada. In June, the company announced its first venture into food services by partnering with meal kit maker Fresh Prep. Through the partnership, Very Good Food's products will be included in the meal kits and recipes. The global meal kit delivery service market was valued at more than $10 billion in 2020. The company does not have a listing in the EPS growth column above because it had negative EPS for Q1 2021.
• Hostess Brands Inc.: Hostess Brands is a maker of packaged foods. The company develops, manufactures, sells, and distributes a variety of packaged sweet goods throughout the U.S.

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.: 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. For Q1 2021, Celsius saw net income increase by 7.1% YOY while revenue grew by 77.3% YOY to a quarterly record.
• 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.
• Burcon NutraScience Corp.: Burcon NutraScience is a Canada-based research and development company. Burcon focuses on plant protein extraction and purification, including of plant proteins. On May 25, common shares of Burcon began to trade on the Nasdaq under the symbol "BRCN." Shares are also listed on the Toronto Stock Exchange under the symbol “BU."

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