Top food industry stocks for Q2 2023 include The Vita Coco Co Inc., Celsius Holdings Inc., and Lamb Weston Holdings Inc., which have surged by about two-thirds or more in the last year even as the broader industry has remained flat.
The food sector, as represented by the S&P 1500 Food Products Industry Index, has provided a one-year trailing total return of -0.4%, compared with an 8% drop in the Russell 1000 Index over the last year.
Here are the top three food stocks with the best value, the fastest growth, and the most momentum. The benchmark figures above are as of April 13, while all numbers in the tables below are as of April 10, 2023.
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.
|Best Value Food Stocks|
|Price ($)||Market Capitalization (Market Cap) ($B)||12-Month Trailing P/E Ratio|
|Marfrig Global Foods S.A. (MRRTY)||1.21||0.8||0.9|
|JBS S.A. (JBSAY)||6.82||7.6||2.5|
|Herbalife Nutrition Ltd. (HLF)||15.50||1.5||4.8|
- Marfrig Global Foods S.A.: Marfrig Global is a Brazilian company that processes and distributes animal protein sources like sheep, cattle, and fish and ready-to-eat products like frozen vegetables. Marfrig’s shares are down 70% in the last year as a result of lower average sales price for beef as well as lower gross margins due to higher cattle purchase prices in the North American market.
- JBS S.A.: JBS is a Brazilian food processing company providing animal products such as pork, beef, poultry, and fish. A sharp reduction in demand and higher livestock purchase prices have cut the company's EBITDA by almost a quarter in the last year, and cash flows have fallen 82% over the same period.
- Herbalife Nutrition Ltd.: Herbalife is a global nutrition company. It offers weight management products and healthy meals and snacks, as well as sports and fitness, energy, and other targeted nutritional products. It also sells personal care products. Herbalife shares shed half of their value amid a period of volatility in the last year as earnings and revenue have fallen.
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 figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.
|Fastest Growing Food Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Performance Food Group Co. (PFGC)||60.43||9.4||820.0||8.3|
|Sendas Distribuidora SA (ASAI)||13.80||3.7||33.4||59.6|
|Celsius Holdings Inc. (CELH)||87.00||6.7||N/A (see description below)||70.7|
- Performance Food Group Co.: Performance Food is a food and foodservice distribution company with operations across the U.S. and Canada. It delivers food and related products to restaurants, businesses, schools, healthcare facilities, and other distributors. Net income surged by more than 700% to $71.1 million in the most recent quarter, driven by growth in operating profit.
- Sendas Distribuidora SA: Sendas is a Brazilian wholesaler of food, beverages, cleaning, personal hygiene, pet, and similar products, as well as packaging and disposables. Net revenue increased by more than a third for the last quarter of 2022. The company expanded rapidly throughout the year, adding 60 new stores.
- Celsius Holdings Inc.: Celsius is a holding company that develops, sells, and distributes a variety of calorie-burning beverages. It sells through multiple channels, including grocery, drug, convenience, and nutrition stores, as well as gyms. Celsius' revenue surged for the fourth quarter of 2022 while net income swung to negative as a result of an increase in selling and marketing expenses. The company does not have an EPS growth figure in table above because it posted a net loss in the last quarter.
Food Stocks With the Most Momentum
These are the food stocks that had the highest total return over the last 12 months.
|Food Stocks With the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|The Vita Coco Co Inc. (COCO)||21.91||1.2||137.9|
|Celsius Holdings Inc. (CELH)||87.00||6.7||73.9|
|Lamb Weston Holdings Inc. (LW)||107.29||15.6||63.8|
|Russell 1000 Index||N/A||N/A||-8.4|
|S&P 1500 Food Products Industry Index||N/A||N/A||-0.4|
- The Vita Coco Co Inc.: Vita Coco sells beverages including coconut water, oil, and milk. It also provides protein-infused water and energy drink products. The company holds substantial market share within the rapidly-growing coconut water space, helping to drive momentum.
- Celsius Holdings Inc.: See company description above.
- Lamb Weston Holdings Inc.: Lamb Weston manufactures and markets frozen potato, vegetable, and dairy products. It raised its annual sales and margin targets in its most recent earnings release amid strong operating momentum. Strong demand has driven performance, along with passing along price increases from input and labor costs to customers.
Risks of Food Stocks
Food stocks carry a wide range of risks for investors. Some of these risks are long-standing, while others are the result of geopolitical tensions, climate issues, and other developing concerns.
- Trade Issues: Food companies often rely on international shipping to exchange ingredients and deliver products globally. Shifting trade networks can mean unexpected tariffs or trade barriers. Unlucky businesses may suddenly find the costs associated with shipping or receiving these items to be unwieldy.
- Heavy Competition: Many food companies face extreme competition and low margins. Customers may be most likely to choose price or convenience over other factors, often giving well-established and larger companies an advantage.
- Climate Change: Climate change has enormous potential to disrupt the global food industry. Agricultural yields are expected to fall by a third or more by 2100 even as population growth could send food demand skyrocketing. Many of the impacted agricultural products, such as corn, could in turn impact other foods like livestock or processed food items utilizing corn products. Businesses will need to adapt as these trends take shape.
Advantages of Food Stocks
Although there are many potential risks to investing in food stocks, this industry also has a number of advantages.
First, demand for food is never in danger of collapsing and indeed is only likely to climb higher as the global population grows. Second, food companies tend to be a fairly effective hedge against inflation because they are often able to pass some of the additional costs associated with an inflationary climate along to consumers. Finally, the food industry allows investors a wide degree of flexibility. An investor can target commodities, restaurants, food suppliers, equipment manufacturers, logistics and shipping companies, and many others, all within the broader food industry.
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