BRBR, LW, POST: 3 Tasty Food Stocks with Strong Buy Ratings
The broader basket of food stocks really took a hit when investors grew euphoric over the potential for “buzzy” weight-loss drugs this year. Despite the appetite-curbing effect of such trendy drugs, tasty food stocks aren’t going anywhere. In fact, some of them, such as BRBR, LW, and POST, still have some tasty upside potential, according to many Wall Street analysts who are standing by their Buy ratings.
Therefore, let’s use TipRanks’ Comparison Tool to check out the three aforementioned food stocks that analysts continue to praise.
BellRing Brands (NYSE:BRBR)
BellRing Brands is one of my favorite under-the-radar food stocks out there. The stock went parabolic this year, blasting off more than 114% year-to-date. Despite the hot run, many analysts continue to stand by their Buy ratings, and it’s not hard to see why. The $7.2 billion mid-cap firm stands behind some of the healthiest, tastiest, and easiest-to-reach-for brands (think Premier Protein) in the health food scene.
In a world that’s growing increasingly health-conscious, BellRing Brands stands out as a long-term winner. Given the long-term secular tailwinds, it’s hard to not be bullish, even as the stock continues to soar.
The protein supplement market is positioned to grow to a whopping $45.3 billion by 2032, representing a compound annual growth rate of 8.7%. BellBring Brands is well-equipped to make a dent in the fast-growing market with its protein-rich products that actually taste decent, not to mention easy to prepare.
In the latest quarter (Fiscal Q4), BellRing clocked in nearly 25% in revenue growth, driven higher by its Premier Protein brand, which saw sales pop 30.2%. On its own, the growth was impressive. But what’s even more impressive is how sustainable the growth rate could be as the world continues to reach for protein-rich health products over sugary candy bars. As a relative lightweight in the food world, I view plenty of runway as the company looks to claw share from industry competitors.
CEO Darcy Davenport sounded incredibly confident in his firm’s growth plans and shake expansion after the firm unveiled its impressive results. Davenport also noted of the “strong tailwinds” in the convenient nutrition space. It’s these secular tailwinds that could help BellRing Brands keep pole-vaulting over expectations.
What is the Price Target for BRBR Stock?
BellBring Brands stock is a Strong Buy, according to analysts, with 10 Buys and one Hold assigned in the past three months. The average BRBR stock price target of $53.55 implies 2.1% downside potential.
Lamb Weston Holdings (NYSE:LW)
Lamb Weston stock peaked earlier this year, just shy of $115 per share, before plunging by around 28% from peak to trough. Since bottoming out in October (alongside the rest of the market), the stock has been sharply surging higher. The fries and frozen potato products (waffle fries, anyone?) company may seem like a victim of the so-called Ozempic onslaught.
As we learn more about the long-term side effects of being on such appetite-curtailing drugs, I have a feeling that consumer appetites will revert back to their old ways, if not overshoot.
Indeed, some folks may gain weight after going “off” weight-loss drugs. And for the comfort food stocks, such drugs may be a short-term headwind but a longer-term tailwind. When it comes to comfort foods, fries ought to be at or around the top of the list. No quick-serve meal at home or the local restaurant is complete without a side of fries, after all.
As the stock continues to fluctuate, value seekers may be wise to step in. Fries and potatoes can be a pretty commoditized business. The source of Lamb Weston’s moat is its low costs of production across the supply chain — not to mention the power of its brands.
All considered, I view Lamb Weston as a tasty tater (I’m very much bullish) following the recent reaffirmation of its FY24 (Fiscal Year 2024) guidance alongside an announcement to buy back around $500 million in shares. Looking ahead, the firm sees EBITDA growth in the mid-to-high-single digit range, a pretty decent pop for an old-school food processor. At 14.5 times trailing price-to-earnings (P/E), the stock trades at a discount to the packaged foods industry average of 19.5 times.
What is the Price Target for LW Stock?
Lamb Weston’s a Strong Buy, according to analysts, with five unanimous Buy ratings assigned in the past three months. The average LW price target of $128.80 entails 28% upside potential.
Post Holdings (NYSE:POST)
Post is a consumer packaged goods firm behind many popular cereal brands found in the middle aisle of your local grocery store. The company owns healthy cereal brands in addition to tasty, sugary ones. In any case, cereals aren’t an exciting place to be right now, as more consumers opt to skip the middle aisle altogether.
Despite the pressures, Post stands out as an intriguing value play after sagging steadily lower through the year. Now down around 9% from its highs, I view Post stock as an intriguing value option as it looks to make the most out of a subpar hand.
What’s there to look forward to as the consumer staple segment drags its feet? Back in October, JPMorgan (NYSE:JPM) analyst Kenneth Goldman initiated coverage on POST stock with a Buy rating, noting potential catalysts that could help propel the share price.
Goldman sees many routes for the firm to “drive longer-term margin expansion,” as it trims away at its debt. I’m in agreement with Goldman. Post has a path higher, even if it hits the M&A pause button for a while in an effort to paydown debt. Post’s path is enough to leave me bullish on the stock from a long-term perspective.
Margin expansion stories may not be the most exciting in the world. But they can drive shareholder value and share prices, even in the most challenging of economic climates. For that reason, I’d not overlook the stock as it drags into the new year.
What is the Price Target for POST Stock?
POST stock comes in as a Strong Buy, with five Buys and one Hold rating assigned in the past three months. The average POST stock price target of $104.33 entails 19.4% upside potential — not bad for a slow-growth consumer staple.
The Takeaway
Food stocks may be boring, even unfavorable, at a time like this, when everyone fears the implications of weight-loss drugs. Still, Wall Street remains bullish, and I think analysts are right to be as we wander into the unknowns of 2024. Of the trio outlined in this piece, analysts see the most upside potential (28%) from Lamb Weston.
