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4 Stocks to Tap the Organic Foods Trend

Manaswita Ghosh Dutta

United States’ organic foods industry is growing without restrain, thanks to the rising health-consciousness among consumers and demand for sustainable, environment-friendly agricultural practices. Investors who seek to capitalize on this trend should consider investing in companies that are looking to meet this demand.

More Consumers are Opting for a Healthier Lifestyle

Increase in health concerns among millennials and Gen Z is a major factor behind the demand for food free of pesticides, insecticides and synthetic fertilizers. This is keeping food companies on their toes and encouraging them to innovate in order to cultivate organic produce.

Organic meat is also much in demand, which is compelling companies to raise livestock without the use of antibiotics and hormones. This boom in demand for organic product has grabbed the attention of supermarkets, grocery stores and hypermarkets. This is the reason why one can find Walmart WMT selling organic produce from local farms.

This health-consciousness can be seen in the growing concern for the environment. Consumers are increasingly realizing the need for environment-friendly food that doesn’t impact their health.

This is expected to drive demand for natural food production further in the United States. Further, several widely-used pesticides can lead to chronic diseases and obesity-related health issues, which is persuading consumers to opt for chemical-free food products.

In fact, the rise in organic farming and consumer demand has led to a rather rosy outlook for the industry.

U.S. Organic Food Market Outlook Shines

According to Hexa Research, the U.S. organic food market is expected to grow rapidly over the 2015-2025 forecast period. This growth can primarily be attributed to increasing demand from health-conscious consumers.

In fact, the report states that U.S. organic food market is poised to be worth $70.4 billion by 2025.

Top 4 Choices

We have, thus, selected four companies for you to consider adding to your portfolio. All of these companies either engage in the production of organic food and beverages or market these products.

Pilgrim's Pride Corporation PPC is a producer and marketer of fresh, refrigerated and value-added chicken products.

Pilgrim’s Pride sports a Zacks Rank #1 (Strong Buy). In fact, the company’s stock price has outperformed the Zacks Food – Meat Products industry on a year-to-date basis (+83.2% vs +31.3%). The Zacks Consensus Estimate for its current-year earnings has improved 8.7% over the past 60 days. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

McCormick & Company, Incorporated MKC is a manufacturer and marketer of spices, seasoning mixes, condiments and other flavoring products that cater to a wide range of consumers from industrial, restaurant, institutional and home markets.

McCormick & Company carries a Zacks Rank #2 (Buy). In fact, the company’s stock price has outperformed the Zacks Food – Miscellaneous industry on a year-to-date basis (+21.3% vs +11%). The Zacks Consensus Estimate for its current-year earnings has increased 0.6% over the past 60 days.

Walmart Inc. is a retail and wholesale giant. The supermarket operator offers a wide range of organic food grocery items, which include packaged goods and whole food products.

Walmart carries a Zacks Rank #2. In fact, the company’s stock price has outperformed the Zacks Retail – Supermarkets industry on a year-to-date basis (+21% vs +10.7%). The Zacks Consensus Estimate for its current-year earnings has advanced 0.4% over the past 60 days.

Beyond Meat, Inc. BYND is a market leading producer of plant-based meat. The company is focused on producing meat substitutes that can benefit human health, promote animal welfare and positively impact climate change.

Beyond Meat carries a Zacks Rank #2. In fact, the company’s stock price has outperformed the Zacks Food – Miscellaneous industry on a year-to-date basis (+115.9% vs +11%). The Zacks Consensus Estimate for its current-year earnings has climbed 11.5% over the past 60 days.

 

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