7 Food Stocks That Are Leading Through Innovation

Posted on Tuesday, November 10th, 2020 by MarketBeat Staff
7 Food Stocks That Are Leading Through InnovationIt might be easy to dismiss food stocks with so many restaurants still struggling to recover from the global pandemic. But food stocks are a broad category that includes not only the way food is consumed but the way it’s made. In 2020, sustainability and a focus on climate change continue to be important trends in this sector.

Another trend to look at is the ability of companies to deliver food to consumers. It’s not surprising that some of the biggest winners in the pandemic are the restaurants that already had a strong digital presence. Consumers' ability to have a contactless experience from start to finish has been a catalyst for some stocks.

Not surprisingly, those are also the trends that create an opportunity for investors looking to dabble in food stocks. As you look to resetting your portfolio for 2021, it may be time to take a bite out of some of these stocks.

With that in mind, we’ve put together this special presentation that identifies seven food stocks that you should consider adding to your portfolio. In addition to gaining exposure to this sector, some of these stocks present the opportunity for industry-beating gains.

#1 - Beyond Meat (NASDAQ:BYND)

Beyond Meat logo

I haven’t been the biggest fan of Beyond Meat (NASDAQ:BYND), and there are reasons for that. However, there’s no question that plant-based foods are a major trend. And Beyond Meat is the only pure-play stock on this trend.

The company has delivered two consecutive quarters of year-over-year revenue growth in the first and second fiscal quarters of 2020. Investors will be looking to see if the company can continue that trend and also if it can start to become consistently profitable. After reporting positive earnings per share (EPS) of three cents in May, Beyond Meat’s profit turned to a negative two cents per share in its most recent quarter.

It remains to be seen if Beyond Meat will consistently deliver strong revenue as other competitors enter the sector, including some of the major packaged meat companies. However, investors that bought the stock at the beginning of the year and held onto it through the pandemic have been rewarded with a stock that has nearly doubled in price.

About Beyond Meat
Beyond Meat, Inc engages in the provision of plant-based meats. Its products include ready-to-cook meat under the brands The Beyond Burger and Beyond Sausage; and frozen meat namely Beyond Chicken Strips and Beyond Beef Crumbles. The company was founded by Ethan Walden Brown and Brent Taylor in 2009 and is headquartered in El Segundo, CA.

Current Price: $113.09
Consensus Rating: Hold
Ratings Breakdown: 3 Buy Ratings, 9 Hold Ratings, 7 Sell Ratings.
Consensus Price Target: $121.44 (7.4% Upside)



#2 - Coffee Holding Co. (NASDAQ:JVA)

Coffee logo

Coffee remains one of the best ways to play the food stock sector. Coffee Holding Co. (NASDAQ:JVA) is not known as a company like Starbucks (NASDAQ:SBUX). However, I see an intriguing opportunity with JVA stock that sets it apart.

The millennial generation is more likely to vote for its value. They really like their coffee too. And Coffee Holdings is a way for them to get the best of both worlds. Coffee Holding is a boutique coffee roaster that was touted as one of Forbes’ Best Small Companies in 2011. Unlike some of the other niche stocks in this sector, JVA has managed to hang on.

One reason for that is the company’s values are in line with the issues that millennials care about deeply. On the company’s website, it lists two of its guiding principles as:

  • Participate in organizations that partner with coffee growers who share our commitment to respect and safeguard the environment.
  • Engage in buying practices that promote ecological sustainability and responsibility both locally and globally.

And the company is also looking to get into the CBD-infused beverage business. JVA has a 49% stake in Jordre Well, a specialty brewer of CBD beverages. JVA expects its initial line of these beverages to be available in Jan. 2021 as part of Jordre Well’s “Stephen James” collection. However, this partnership will also allow Coffee Holdings to branch out into other beverage categories, most notably the seltzer category that is so popular.

Despite being up 76% since the pandemic onset, JVA stock remains down 16.5% in 2020.

About Coffee
Coffee Holding Co, Inc is wholesale coffee roaster and dealer in the U.S. Its products are divided into three categories: Wholesale Green Coffee, Private Label Coffee and Branded Coffee. The Wholesale Green Coffee consists of unroasted raw beans imported from around the world and sold to large and small roasters and coffee shop operators.Read More 

Current Price: $4.35
Consensus Rating: N/A
Ratings Breakdown: 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: N/A



#3 - Chipotle Mexican Grill (NYSE:CMG)

Chipotle Mexican Grill logo

Even before the pandemic, savvy restaurant chains understood that younger consumers were trending towards takeout and food delivery. However, not every company has been able to take advantage of that trend. Chipotle Mexican Grill (NYSE:CMG) is an exception.

Chipotle helped create the fast-casual category. And so when the pandemic hit, the company was in an ideal position to prosper. The company’s commitment to a fast, efficient digital experience paid off last quarter as the company derived 48.8% of its revenue from digital sales.

And, Chipotle also appeals to a desire for healthy, fresh food options. Plus, Chipotle frequently changes its menu and offers limited-time favorites, such as carne asada, to stimulate pent-up demand in their customers. What makes Chipotle's growth more incredible is that they are maintaining loyalty with consumers even after a food-safety issue that would devastate many companies.

CMG stock is up over 48% for the year and has climbed over 170% since the pandemic.

About Chipotle Mexican Grill
Chipotle Mexican Grill, Inc engages in the development and operation of classically-cooked, real food with wholesome ingredients without artificial colors, flavors or preservatives. It offers focused menu of burritos, tacos, burrito bowls, and salads prepared using classic cooking methods. The company was founded by Steve Ells in 1993 and is headquartered in Newport Beach, CA.

Current Price: $1,905.14
Consensus Rating: Buy
Ratings Breakdown: 20 Buy Ratings, 9 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $1,819.76 (4.5% Downside)



#4 - Albertson's (NYSE:ACI)

Albertsons Companies logo

Turning our attention to grocery chains, one of the food stocks for you to consider is Albertson’s (NYSE:ACI). As if we didn’t know already, we all realized how essential grocery chains are to our way of life. It remains to be seen if the timing was right for Albertson’s to go public through an initial public offering (IPO) in June. The stock is basically flat since it started publicly trading.

However, the long-term outlook for Albertson’s looks very strong. First of all, the company has a strong national footprint. Through a merger with Safeway, while concentrated in the western United States, the company also has a presence in the northeast and Chicago. And in 68% of the markets in which it operates, Albertson’s has either the most or second-most market share. Plus, the company is on a strong growth trajectory. The company forecasts that 60% of its local markets will outgrow the U.S. population by at least 60%.

About Albertsons Companies
Albertsons Companies, Inc, through its subsidiaries, engages in the operation of food and drug stores in the United States. The company's food and drug retail stores offer grocery products, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services. As of February 27, 2021, it operated 2,277 stores under various banners, including Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Jewel-Osco, Acme, Shaw's, Star Market, United Supermarkets, Market Street, Haggen, Kings Food Markets, and Balducci's Food Lovers Market; and 1,727 pharmacies, 1,313 in-store branded coffee shops, 400 adjacent fuel centers, 22 distribution centers, and 20 manufacturing facilities, as well as various digital platforms.Read More 

Current Price: $30.09
Consensus Rating: Hold
Ratings Breakdown: 4 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $24.00 (20.2% Downside)



#5 - Kroger (NYSE:KR)

The Kroger logo

Another grocery chain to watch is Kroger (NYSE:KR). When investors focus on retail food stocks, it’s logical for the attention to turn to names like Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT). But Kroger has also been rapidly adapting to a digital environment. The company is partnering with the e-commerce company Miraki to launch a digital marketplace.

And the timing couldn’t be more perfect. An event like our current pandemic has a way of changing long-entrenched habits. It’s quite likely that consumers who have adopted the idea of ordering their groceries online will continue to do so even after the pandemic is over.

And analysts like the direction that Kroger is moving. Kroger has been making a habit of delivering year-over-year increases on the top and bottom lines. And, the company pays a steady dividend that it has increased for the last 13 years. Analysts give the company a consensus price target that suggests the stock may climb approximately 10% higher than its current level.

About The Kroger
The Kroger Co engages in the operation of supermarkets and multi-department stores. Its brands include Big K, Check This Out…, Heritage Farm, Simple Truth, and Simple Truth Organic. The company was founded by Barney Kroger in 1883 and is headquartered in Cincinnati, OH.

Current Price: $41.02
Consensus Rating: Hold
Ratings Breakdown: 1 Buy Ratings, 11 Hold Ratings, 4 Sell Ratings.
Consensus Price Target: $38.38 (6.4% Downside)



#6 - IDEXX Laboratories (NASDAQ:IDXX)

IDEXX Laboratories logo

The last two companies on the list have to do with the convergence of pet care and food stocks. The first of the two is IDEXX Laboratories (NASDAQ:IDXX). IDEXX is divided into several business units. These include small animal diagnostics, a reference laboratory and diagnostic services, veterinary practice management, water quality, diagnostic testing, and software monitoring for managing the herd and flock health and productivity, and bioanalytics.

And in 2020, the stock has even become a sneaky Covid-19 stock. The company’s Opti Medical Systems unit has received Emergency Use Authorization (EUA) from the FDA for its Covid-19 test kit.

All of which means that despite the stock being up 80% for the year, analysts give the stock a price target that suggests the IDXX stock may climb over 15% from its current level. And for its part, the company just delivered an earnings report in which they beat estimates on both the top and bottom lines.

About IDEXX Laboratories
IDEXX Laboratories, Inc engages in the development, manufacture, and distribution of products and services for the animal veterinary, livestock and poultry, dairy and water testing markets. It operates through the following segments: CAG, Water, LPD, and Other. The CAG segment develops, designs, manufactures, and distributes products and performs services for veterinarians and the biomedical analytics market, primarily related to diagnostics and information management.Read More 

Current Price: $658.56
Consensus Rating: Buy
Ratings Breakdown: 3 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $675.00 (2.5% Upside)



#7 - Elanco Animal Health (NYSE:ELAN)

Elanco Animal Health logo

The last of the food stocks we’re inviting you to look at is Elanco Animal Health (NYSE:ELAN). The amount of money being spent on pet health continues to increase. And Elanco is a “pharmaceutical company that produces medicines and vaccinations for pets and livestock.” The company has 125 brands that are sold in over 90 countries. And according to the company’s website, it is in the top four in all of its major markets.

The stock has been affected by the pandemic as many pet owners have been unable or unwilling to take their pets to the vets. Because of this, ELAN stock is up just 9% for the year. However, a better barometer for the stock may be its performance post-pandemic. The stock is up over 90% since the onset of the pandemic. And analysts love the stock and give it a consensus buy rating with a price target that suggests it may climb over 10% from its current level.

About Elanco Animal Health
Elanco Animal Health, Inc engages in the innovation, development, manufacture and market products for companion and food animals. It offers products through the following four categories: Companion Animal Disease Prevention, Companion Animal Therapeutics, Food Animal Future Protein & Health, and Food Animal Ruminants & Swine.Read More 

Current Price: $32.33
Consensus Rating: Buy
Ratings Breakdown: 6 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $36.50 (12.9% Upside)

 

As investors search for opportunities in 2021, the food solutions market should not be overlooked. By 2025, the global market may rise to $300 billion. Much of this will be due to advances in plant-based products, different methods for food delivery, farming, and animal health.

A new generation of consumers is very interested in where their food comes from. And that is making this a profitable area for innovation that will be rewarded by consumers. However, this also means that you have to pay attention to the valuation of these stocks. Some stocks, like Beyond Meat, maybe overvalued at its current level. However, there are other alternatives for consumers who are looking for value.

Beyond the innovation angle, there is another reason to consider buying food stocks right now. These tend to be defensive stocks. Yes, the market is likely to arise from a future stimulus. But with the possibility of a slower economic recovery, possibly enhanced by targeted lockdowns, this is an area to consider for finding value.

20 Stocks Analysts Can't Stop Upgrading

As you know, a single upgrade from a broker probably won't be a major game-changer for any single stock. But, what if there was a stock that had been upgraded by more than 10 different brokers during the last 90 days?

If ten different brokers have all upgraded a stock within the last few months and the price hasn't skyrocketed (at least, not yet), you would want to take a pretty hard look at it.

It turns out that there are actually 20 different companies that have been upgraded or had their price target increased at least ten times during the last ninety days by more than 10 different brokers. This slideshow lists those companies.

View the "20 Stocks Analysts Can't Stop Upgrading" Here.





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