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Spotlight to Stay on Food Companies: 5 Stocks to Buy for June

Vrishali Bagree
·5 min read

Amid the COVID-19 mayhem, the food space appears to be in a good position with its supply lines flowing. Incidentally, with more Americans staying at home and working remotely, the demand for grocery and food-related items has risen sharply. Also, to maintain social distancing, consumers are largely reducing the frequency of their shopping trips, and in turn loading pantries at once.

Consequently, food companies are witnessing increased demand from retail, mass merchants, supermarkets and e-tail customers, which is also helping offset the weak demand from foodservice clients. Such trends are working well for players in the food industry. Evidently, this earnings season, several companies in this space saw their sales rise on increased at-home consumption. As cases of coronavirus infection are still on the rise, we believe that social distancing and the resultant stockpiling trends are likely to continue boosting revenues of these players.   

Apart from this, focus on innovation and reinvention of product mixes, around-the-clock shifts, improved delivery options, and brand-building efforts are likely to keep backing the performance of the industry participants. Moreover, stringent saving and restructuring efforts should help these companies tackle cost inflation as well as expenditures related to managing operations amid the pandemic.

On that note, we have narrowed down on five well-ranked stocks from the food space that are gaining from the above-mentioned trends and are poised to keep their impressive show on. Notably, these stocks have garnered returns of at least 30% in the past three months.

Grab These 5 Food Stocks

B&G Foods, Inc. BGS sports a Zacks Rank #1 (Strong Buy). This provider of high quality, shelf-stable, frozen food and household products across the United States, Canada and Puerto Rico has delivered a positive earnings surprise of 5.4%, on average, in the trailing four quarters. Encouragingly, B&G Foods’ shares have surged 46.2% in the past three months. In its recently reported first-quarter 2020 results, both top and bottom lines rose year over year and beat the Zacks Consensus Estimate, backed by solid pricing, gains from buyouts and increased demand, thanks to the coronavirus-led stock hoarding. Also, management stated that it anticipates net sales and adjusted EBITDA for 2020 to significantly exceed the guidance provided in February. The Zacks Consensus Estimate for the current financial year earnings has improved 19.2% in the past 30 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Investors can also count on The Hain Celestial Group, Inc. HAIN, which produces and sells various natural and organic food as well as personal care products, with operations in the United States and internationally. This Zacks Rank #1 company delivered positive earnings surprises in the past three successive quarters and has seen its shares rally 31.7% in the past three months. In third-quarter fiscal 2020, both top and the bottom lines beat the Zacks Consensus Estimate and improved year over year. Also, management raised its fiscal 2020 guidance for profit metrics, courtesy of increased at-home consumption as well as its smooth transformation plan. The Zacks Consensus Estimate for its current financial year earnings has moved up 8.2% in the past 30 days.

United Natural Foods, Inc. UNFI, which has seen its shares more than double in the past three months, recently released robust preliminary results for the third quarter of fiscal 2020. Results of this distributor of natural, organic and specialty food and non-food products gained from solid demand from pantry loading amid the coronavirus outbreak. Also, to keep operating amid the crisis, the company is undertaking actions like additional hiring, temporary bonus payments, and sanitization and safety measures for employees. Though these efforts entail high costs, the company is likely to have countered the same. The Zacks Consensus Estimate for its current financial year earnings has soared considerably in the past 30 days. Markedly, this Zacks Rank #1 company delivered a positive earnings surprise of 18.5% in the last reported quarter.

Sprouts Farmers Market, Inc. SFM is another splendid bet. This Zacks Rank #1 stock has surged 54.9% in the past three months and its earnings have outdone the consensus mark in the last three consecutive quarters. In first-quarter 2020, both earnings and revenues improved year over year and surpassed the Zacks Consensus Estimate. This provider of fresh, natural and organic food products benefited from a spike in demand during the latter part of the quarter as Americans stockpiled essential items in the wake of the coronavirus outbreak. The Zacks Consensus Estimate for the current financial year has increased 16.5% in the past 30 days.

Beyond Meat, Inc. BYND is also worth a bet. This Zacks Rank #2 (Buy) company is a renowned provider of innovative plant-based meats in the United States and internationally. Notably, the company’s bottom line exceeded the Zacks Consensus Estimate considerably in the last reported quarter and its shares have appreciated 45.3% over the past three months. Beyond Meat saw solid sales in the first quarter, wherein its strong retail sales offset the softness in foodservice. Moreover, management’s outlook for 2020 reflects continued gains from increased demand in the retail channel, courtesy of higher at-home consumption owing to the pandemic. The consensus mark for earnings for the current financial year has jumped 33.3% in the past 30 days.

5 Stocks to Soar Past the Pandemic: In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.

See the 5 high-tech stocks now>>

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The Hain Celestial Group, Inc. (HAIN) : Free Stock Analysis Report
United Natural Foods, Inc. (UNFI) : Free Stock Analysis Report
BG Foods, Inc. (BGS) : Free Stock Analysis Report
Sprouts Farmers Market, Inc. (SFM) : Free Stock Analysis Report
Beyond Meat, Inc. (BYND) : Free Stock Analysis Report
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