Dig Into These 4 Food Stocks on Elevated At-Home Consumption
The novel coronavirus has had a sweeping impact on consumers’ eating patterns. The initial months of lockdown and restrictions on stepping out caused consumers to stay and eat indoors – a trend which has formed part of the new normal. Markedly, even with things opening up and restrictions lifted, many Americans prefer staying and dining at home to avoid catching the virus. A survey by Acosta suggests that more than 50% of U.S. consumers have been eating more often at home since the outbreak of COVID-19.
Apart from being safe and healthy, eating at home is less expensive compared to eating outside. Moreover, staying indoors has helped individuals discover new sides to them, prompting the development of varied interests. Naturally, people are indulging in activities like cooking, home styling and other household chores along with work and online entertainment.
Apart from this, people working from home or those with children are going heavy on convenient and comfort foods such as snacking items, packaged foods and meal-kits. Certainly, greater at-home consumption is driving demand for natural food ingredients as well as packaged and snacking food products. Also, to maintain social distancing, consumers are largely reducing the frequency of shopping trips, and in turn loading pantries or shopping online.
Consequently, a number of food companies have been witnessing increased demand from retail, mass merchants, supermarkets and e-tail customers. This is helping them make up for the weak demand from foodservice clients stemming from reduced away-from-home food consumption. With the coronavirus cases continuously soaring and no sure shot treatment in place, the stay-at-home and dine-at-home trends are likely to stay. This is likely to work in favor of food companies, which indeed have been playing their innovation, marketing and other brand-building strategies well.
That said, we have picked four delicacies from the Zacks Food – Miscellaneous industry, which is currently ranked #110, placing it among the top 45% of more than 250 Zacks industries. These stocks are well placed to continue benefiting from the burgeoning demand induced by the increased at-home consumption. Notably, most of these Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks have returned at least 25% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
4 Stock Delicacies For Now
United Natural Foods, Inc. UNFI: This natural and organic foods provider has been gaining from rising demand stemming from coronavirus-induced higher at-home consumption. In fact, the company anticipates food-at-home consumption demand to remain elevated, outpacing demand for away-from-home services in fiscal 2021. Apart from these, integration synergies related to Supervalu is driving United Natural. Importantly, the Zacks Rank #1 stock has soared 61.7% in the past six months. The Zacks Consensus Estimate for its current fiscal-year earnings per share has moved 7.8% up to $3.44 over the past seven days. The consensus mark suggests growth of 26.5% from the year-ago reported figure. United Natural has a trailing four-quarter earnings surprise of 4.8%, on average.
General Mills, Inc. GIS: This renowned manufacturer of branded consumer foods offers products across categories like ready-to-eat cereals, convenient meals, snacks, yogurt, super-premium ice creams, baking mixes and ingredients, to name a few. Burgeoning demand from coronavirus-led increased at-home consumption has been bolstering sales of this Minneapolis-based company. In its first-quarter fiscal 2021 earnings call, management said second-quarter at-home food demand is expected to remain high compared with pre-pandemic levels. This includes expectations of high-single-digit total retail sales growth in the North America Retail categories. Notably, General Mills looks well placed on focus on its three core priorities for fiscal 2021, which include competing efficiently, boosting efficiency to fuel investments and reducing leverage. The consensus mark for its fiscal 2021 bottom line has gone up almost 2% to $3.60 over the past 30 days. The Zacks Rank #2 company has a trailing four-quarter earnings surprise of 7.3%, on average. Its shares have gained 2.3% in the past six months.
Lamb Weston Holdings, Inc. LW: The Idaho–based frozen potato products company has been benefiting from steady demand in the Retail segment amid the pandemic, helping it counter declines in the foodservice channel. Well, Lamb Weston boasts a solid Retail segment, which comprises sales of private label and branded items to mass merchant, grocery and club customers across North America. The company reported first-quarter fiscal 2021 results last week, wherein Retail business sales surged 19%. We believe that higher consumption amid the pandemic is likely to keep aiding Lamb Weston’s retail business in the near term. Also, the company’s robust price/mix along with offerings and capacity expansion endeavors bodes well. The consensus mark for its fiscal 2021 bottom line has gone up 14.4% to $2.38 over the past seven days. This Zacks Rank #2 stock has rallied 25.3% in the past six months.
Lancaster Colony Corporation LANC: The Zacks Rank #2 company’s shares have jumped 26.2% in six months. Notably, this manufacturer and marketer of specialty food products operates through the Retail and Foodservice segments. Like most food companies, Lancaster Colony’s retail sales have been getting a boost from increased demand. Also, the company has been benefiting from contributions from product introductions. In its fourth-quarter fiscal 2020 conference call, management stated that it expects continued sales improvement in the retail segment in fiscal 2021, courtesy of shelf-stable dressings and sauces sold under license agreements. Apart from this, the company’s cost-savings plan and favorable net price realization are likely to help tackle commodity cost inflation. The Zacks Consensus Estimate for its current fiscal-year earnings has moved north by 9.6% to $6.17 over the past 60 days. Also, the consensus mark suggests a solid 25.2% upside from last years’ reported figure.
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