Hungry For Gains? Check Out These 3 Food Stocks
It’s no secret that inflation is causing some problems in both financial markets and the economy. This has led many investors to pursue adding defensive positions given the potential for further volatility.
While it’s unclear how long this trend continues, it’s never a bad idea to consider adding shares of companies that offer stability and reliability to your portfolio for diversification purposes. One specific area of the consumer staples sector fits the bill—food companies.
Since people are always going to need to eat, these are businesses that see consistent demand for their products regardless of what’s happening to the economy. While it's true that some of these food products companies are facing pricing pressure thanks to inflation, many are navigating the issue well.
There's also a chance that demand for food products is going to bounce back in a big way as people feel comfortable eating in public places again.
Finally, the fact that more people are cooking and snacking at home now thanks to remote work and recently remodeled kitchens could benefit food stocks in a big way.
If that sounds appetizing, take a look at our list of the top 3 food stocks to buy now:
1. Tyson Foods
First up is Tyson Foods (NYSE:TSN), one of the world’s largest suppliers of beef, chicken, pork, and prepared foods. With iconic brands like Tyson, Jimmy Dean, Hillshire Farm, and Ball Park, this company has created a strong position in the U.S. meat industry.
Tyson also sells its products in Australia, Canada, Central America, Chile, China, Mexico, and more, which means it has some international growth potential to consider. The stock is trading at all-time highs after the company reported impressive first-quarter results, including a big EPS beat of $0.97 with $2.87 in earnings per share, up 48% year-over-year.
The company’s strong quarterly performance was largely driven by increasing U.S. meat prices, another reminder of how far-reaching the impacts of inflation can be.
Tyson recently increased its prices to deal with higher costs for labor, transportation, and grains and is seeing heavy demand for its products at this time. The stock also offers investors a 1.86% dividend yield, which is another reason why it's such an attractive option to consider in today’s market.
2. McDonald’s Corp
If you’re going to own a fast-food restaurant company, why not own the biggest one in the world? McDonald’s (NYSE:MCD) is a name that likely needs no introduction, as the company’s 40,000+ fast-food restaurants located in over 100 countries are instantly recognizable by their golden arches.
It’s exactly the type of stock that is appealing in a volatile market, thanks to a beta value of 0.60 and a long history of dividend growth. McDonald’s is actually a dividend aristocrat, as the company has grown its annual payout for 44 consecutive years.
There’s a lot to like about McDonald’s investment in its digital sales channels, which expands the company’s reach thanks to mobile ordering and delivery options. Digital sales were up by 60% year-over-year in 2021 and could be a big contributor to the company’s top-line in coming quarters.
Additionally, the fast-food giant has a good chance to deliver strong earnings this year as people head back out to eat following the pandemic. In Q4, the company posted revenue of $6.01 billion, up 12% year-over-year, and saw same-store sales jump by 12.3%.
The bottom line here is that McDonald’s is a financially-sound company with a history of dividend growth that is successfully adapting to changing consumer habits, which certainly makes it worth a look at this time.
3. Hershey Co
Hershey Co (NYSE:HSY) has truly been one of the strongest stocks in the consumer staples sector recently, up over 17% over the last 3 months. After the global confectionery company’s latest earnings report, there’s a good chance the sweet gains continue in the near term.
Hershey recently delivered Q4 adjusted EPS of $1.69, up 13% year-over-year and exceeding the consensus estimate by $0.08. This quarterly performance tells us that Hershey is navigating issues like supply chain holdups and inflation well, which are some problems that are having a bigger impact on other companies in the food products industry.
Hershey’s products include over 90 brands such as Kit Kat, Reese’s, Heath, Twizzlers, and more. Additionally, the company has been expanding its product portfolio into snack foods through acquisitions, which is another reason why it stands out.
The company’s North America Salty Snacks segment grew by 39% year-over-year to reach $159 million in sales, which tells us that this strategy is paying off. Finally, a 1.76% dividend yield makes Hershey a tasty opportunity for investors to consider at this time.