Food stocks have consistently remained a popular choice among conservative investors seeking to allocate their funds effectively.
However, the food industry has risks. Before investing in dependable food stocks, do your research.
The food sector includes food and non-alcoholic beverage producers. This does not include restaurants or fast food chains.
Because food consumption is continuously independent of stock market fluctuations, food corporations are considered highly stable.
These enterprises are stable because food demand is predictable. So investors include food equities to stabilize their portfolios. Warren Buffet owns Coca-Cola and Kraft Heinz. Our list of top food stocks includes these companies.
If you want to invest as an expat or high-net-worth individual, which is what i specialize in, you can email me (advice@adamfayed.com) or use WhatsApp (+44-7393-450-837).
Nothing written here is financial advice.
We don’t advise holding individual stocks. ETFs and funds are a better option.
This article merely looks at some of the better options.
What are Food Stocks
“Food stocks” can refer to a variety of different things, depending on the particular definition that is being used.
The traditional classification, which only includes people who are involved in the production of food, is much too limited.
The reach of food-sharing circles can be enlarged if they adhere to the premise that “there is always food and drink.”
It is possible to notice, inside the stock market, companies like Hello Fresh, McDonald’s, and Coca-Cola Company.
The stock market exhibited a significant amount of volatility throughout the summer of 2022.
At first glance, it may appear as though enterprises dealing in consumer goods, namely those operating in the food and beverage industry, can demonstrate resilience and continue to maintain excellent performance even in the face of challenging economic situations and volatile market conditions.
This is because the fundamental requirement of sustenance does not alter, even though there may be potential declines in consumer spending on leisure pursuits such as dining out or partaking in video streaming.
In most cases, participating in such activities within the boundaries of one’s residence is the alternative that offers the greatest savings in terms of financial outlay.
During epochs that are characterized by rising inflation and economic instability, certain investors are tempted to allot their resources towards food stocks due to the greater durability that these equities exhibit in the face of economic shifts.
Benefits of Investing in Food Stocks
Investing in food stocks typically results in demand that is quite consistent and reliable, which is one of the most significant advantages connected with doing so.
The global food market is currently valued at more than $9 trillion, and its growth is vigorous due to the increasing population found all over the world.
These businesses, on the other hand, are characterized by a mainly non-cyclical nature, which enables them to thrive independently of the ups and downs experienced by the economy as a whole.
It should not come as a surprise, therefore, that a significant number of the best food stocks have healthy cash flows and pay out huge amounts of money to shareholders in the form of dividends.
Because of this quality, they are desirable as long-term investment options for investors who prefer to minimize their risk exposure and who have the requisite amount of spare time to let the dividends build up and increase their overall return.
Private banking clients often seek advice on diversifying their portfolios, including investing in the best food stocks to capitalize on the industry’s growth potential.
Risks of Investing in Food Stocks
Food industry stocks frequently exhibit modest net income margins, which makes them vulnerable to a variety of factors.
These factors can be disruptions in the supply chain, disease outbreaks, climate change, geopolitical tensions leading to retaliatory tariffs on imported food products, weather events, and other influences that can substantially impact the cost of raw materials and commodities essential for their products.
Pricing power and brand strength are two crucial elements that lessen the impact of cost hikes and help firms in recovering their operating leverage.
Both of these factors are important for organizations. As a result, the market for food goods presents considerable opportunities for growth for larger businesses, which have the potential to profit from economies of scale.
In conclusion, it is of the utmost importance for investors in the food company to be aware of the potential dangers connected with changing client preferences.
The rising demand among customers for food options that are not only nutritious but also come from sources that are socially and environmentally responsible is an emerging trend.
As a direct consequence of this, the demand for food goods that do not meet these expectations may decrease, which may result in rising costs.
What are the Best Food Stocks to Buy
Nestlé S.A. (OTCMKTS:NSRGY)
Nestlé S.A. (OTCMKTS:NSRGY) is widely recognized as one of the largest multinational corporations in the food and beverage industry, boasting an extensive range of products including cereals, coffee, juices, noodles, and various other items within its diverse portfolio.
Nestlé S.A. (OTCMKTS:NSRGY) had a decline in its shipments during Q4 2022, coinciding with its decision to raise pricing, which can be attributed to the impact of inflation.
Notwithstanding this, it generated a total revenue of $9.9 billion for the complete calendar and fiscal year.
Investment funds focused on long-term stability and growth may allocate a portion of their assets to the best food stocks, recognizing their resilience in uncertain economic conditions.
The Hershey Company (NYSE:HSY)
The Hershey Company (NYSE:HSY) is a prominent American food corporation renowned for its confectionery products, particularly its chocolates.
In addition, the company offers a range of baking ingredients, toppings, and various food products. The location of the establishment is situated in Hershey, Pennsylvania.
The Hershey Company (NYSE:HSY) has recently adopted a proactive strategy towards share repurchases, exemplified by the acquisition of one million shares for $240 million from the Hershey Trust Company in February 2023.
Renaissance Technologies, led by Jim Simons, holds the most significant ownership position in The Hershey Company (NYSE:HSY), with a total of 2.6 million shares valued at around $617 million.
The Hershey Company (NYSE:HSY) is included in the list of the world’s best food stocks, with The Coca-Cola Company (NYSE:KO), PepsiCo, Inc. (NASDAQ:PEP), and Nestlé S.A. (OTCMKTS:NSRGY).
When constructing a portfolio of the best defensive stocks, consider including food stocks as they tend to exhibit lower volatility and consistent demand, making them a reliable choice.
The Coca-Cola Company (NYSE:KO)
The Coca-Cola Company (NYSE:KO) is a prominent multinational corporation specializing in the production and distribution of carbonated beverages.
In addition to its flagship product, Coca-Cola, the company offers a diverse range of beverages including juices, coffee, and energy drinks.
The Coca-Cola Company (NYSE:KO) actively participated in the prevailing enthusiasm surrounding ChatGPT by publicly declaring in February 2023 its status as the inaugural signatory to an alliance aimed at integrating ChatGPT’s concepts into marketing and other operational domains.
Berkshire Hathaway, headed by Warren Buffett, holds the highest ownership holding in The Coca-Cola Company (NYSE:KO), amounting to $25 billion. This significant investment is represented by a total of 400 million shares.
Archer-Daniels-Midland Company (NYSE:ADM)
The Archer-Daniels-Midland Company (NYSE:ADM) is a corporation that operates in the agricultural sector, with its headquarters located in Chicago, Illinois.
The company engages in the global distribution of various agricultural commodities, including but not limited to wheat, corn, oats, barley, milo, and other related items.
The Archer-Daniels-Midland Company (NYSE:ADM) is presently experiencing labor disputes, as employees at its Decatur facility initiated a strike in February 2023, alleging that the company is engaging in negotiations with them in a manner inconsistent with good faith.
The primary shareholder of Archer-Daniels-Midland Company (NYSE:ADM) is Markel Gayner Asset Management, managed by Tom Gayner, with a significant ownership of 1.4 million shares valued at $135 million.
Archer-Daniels-Midland Company (NYSE:ADM), PepsiCo, Inc. (NASDAQ:PEP), Nestlé S.A. (OTCMKTS:NSRGY), and The Coca-Cola Company (NYSE:KO) are among the globally renowned food corporations that have demonstrated significant profitability.
PepsiCo, Inc. (NASDAQ:PEP)
PepsiCo, Inc. (NASDAQ:PEP) is a renowned food and beverage corporation recognized predominantly for its assortment of carbonated beverages.
In addition, the company also offers a range of snacks and other merchandise for sale. The location of the entity is situated in Purchase, New York.
Among these options, Fundsmith LLP, managed by Terry Smith, holds the highest stake in PepsiCo, Inc. (NASDAQ:PEP). The entity possesses a total of 6.6 million shares, which now hold a market value of $1.2 billion.
Investors looking for stability and income may find the best consumer staples stocks, including top food companies, as a key component of their dividend-focused investment strategy.
The Kraft Heinz Company (NASDAQ:KHC)
The Kraft Heinz Company (NASDAQ:KHC) is an American corporation that has a long-standing history, having been established in 1864, coinciding with the conclusion of the American Civil War.
The company is centrally located in Pittsburgh, Pennsylvania, and specializes in the production and distribution of a diverse range of food items, including sauces, meats, beverages, groceries, and seasonings, among others.
The Kraft Heinz Company (NASDAQ:KHC) is currently experiencing favourable sentiment from financial institutions on Wall Street, as prominent businesses including Mizuho, Piper Sandler, Morgan Stanley, and Deutsche Bank have raised their price objective for the company’s shares.
Morgan Stanley, as an example, holds the belief that the organization possesses resilient underlying factors that will enable it to withstand adverse macroeconomic conditions.
In December 2022, the bank increased its share price estimate for The Kraft Heinz Company (NASDAQ:KHC) from $38 to $43.
The primary shareholder of The Kraft Heinz Company (NASDAQ:KHC) is Warren Buffett, well recognized as the Oracle of Omaha, along with his holding company Berkshire Hathaway.
Berkshire Hathaway possesses a substantial ownership stake of 325 million shares, valued at around $13.2 billion.
Unilever PLC (NYSE:UL)
Unilever PLC (NYSE:UL) is a multinational corporation operating in the consumer defensive sector, renowned for its extensive portfolio of various food and beverage products, making it one of the leading entities in this industry globally.
The establishment offers a variety of products, including ice cream, mayonnaise, ketchup, tea, and various other items.
The Nutrition and Ice Cream business divisions of Unilever PLC (NYSE:UL) contributed to 36% of the company’s total annual turnover in 2022, resulting in a revenue of EUR22 billion. The ice cream segment of Unilever PLC (NYSE:UL) experienced a notable growth rate of 9%.
Fisher Asset Management, headed by Ken Fisher, has the position of being the largest investor in Unilever PLC (NYSE:UL) with a significant holding of $389 million, which is represented by a total of 7.7 million shares.
For investors interested in consumer spending trends, exploring the best consumer discretionary stocks, such as food service and restaurant stocks, can provide exposure to evolving consumer preferences.
JBS S.A. (OTCMKTS:JBSAY)
JBS S.A. (OTCMKTS:JBSAY) holds the distinction of being the foremost global meat corporation in terms of size and market share.
The company possesses a diverse range of brands within its portfolio, and it engages in the production and distribution of various types of meat, including chicken, beef, mutton, hog, and other meat products, alongside the sale of associated by-products.
The company’s headquarters are located in Sao Paulo, Brazil.
In February 2023, the Department of Labor imposed a fine on a food sanitation firm responsible for the maintenance of JBS S.A. (OTCMKTS:JBSAY)’s plants in the United States.
The company was found to have employed over one hundred minors across thirteen distinct plant locations. The agency is imposing civil penalties for $1.5 million.
Wilmar International Limited (SGX:F34.SI)
Wilmar International Limited (SGX:F34.SI) is a Singapore-based corporation specializing in the production and distribution of food goods.
The company possesses a global presence, with operational activities spanning several regions such as Europe, Asia, China, India, and Africa.
The company engages in the production and distribution of various consumable goods, including edible food oil, rice, dairy products, sugar, and noodles.
Wilmar International Limited (SGX:F34.SI) saw a significant financial performance in 2022. The company’s revenue exhibited a notable growth of 12%, reaching a substantial amount of $73 billion.
Moreover, its earnings demonstrated an even more remarkable increase of 27%, totalling $2.4 billion.
McDonald’s Corporation (NYSE:MCD)
The McDonald’s Corporation (NYSE:MCD) is a prominent global fast-food retailer.
As of December 2021, the company has a global network of over forty thousand restaurants and maintained its corporate headquarters in Chicago, Illinois.
The McDonald’s Corporation (NYSE:MCD) is presently engaged in the exploration of plant-based beef alternatives, as it contemplates prospects.
The company has initiated the implementation of plant-based nuggets in its German establishments.
The primary shareholder of McDonald’s Corporation (NYSE:MCD) is Bridgewater Associates, managed by Ray Dalio, possessing a significant stake of 1.5 million shares valued at approximately $416 million.
Mondelez International, Inc. (NASDAQ:MDLZ)
Mondelez International, Inc. (NASDAQ:MDLZ) is a multinational corporation specializing in the production and distribution of various snack items, including but not limited to cookies, snack bars, gums, chocolates, and candies.
In addition to these items, the company’s portfolio also includes cheese, groceries, and powdered beverages. The company is headquartered in Chicago, Illinois.
Mondelez International, Inc. (NASDAQ: MDLZ) is actively pursuing the Chinese market, with the Suzhou facility, operated by the company, having said in February 2023 that it has become the inaugural food plant globally to employ cutting-edge technology such as machine learning and the internet of things (IoT).
The principal stakeholder of Mondelez International, Inc. (NASDAQ: MDLZ) is GLG Partners, managed by Noam Gottesman, possessing significant ownership of 3.4 million shares valued at approximately $231 million.
General Mills, Inc. (NYSE:GIS)
General Mills, Inc. (NYSE:GIS) is a publicly-traded company specializing in the production and distribution of packaged food items.
Their product portfolio includes a wide range of offerings such as meals, frozen desserts, frozen pizza, soup, snacks, and several other food products. The company’s headquarters are located in Minneapolis, Minnesota.
The chief executive officer of General Mills, Inc. (NYSE:GIS) delivered positive news to investors during a conference in February 2023. H
e reported that the company has not observed any resistance from consumers about price hikes, leading to an optimistic outlook for increased revenue in the current fiscal year.
The primary hedge fund investor in General Mills, Inc. (NYSE: GIS) is Renaissance Technologies, managed by Jim Simons.
Renaissance Technologies holds a significant stake in the company, with ownership of three million shares valued at approximately $254 million.
Tyson Foods, Inc. (NYSE:TSN)
Tyson Foods, Inc., a publicly traded business listed on the New York Stock Exchange under the ticker symbol TSN, has the position of being the second largest global entity in the meat processing industry, following the Brazilian conglomerate JBS.
The company engages in the processing of bovine and porcine animals to produce beef and pork, while also offering chicken meat for sale.
The company’s portfolio encompasses a diverse range of products, including burger patties, sausages, and steaks.
In February 2023, Tyson Foods, Inc. (NYSE:TSN) encountered a setback as the U.S. Supreme Court dismissed its contentions to grant federal judges the authority to supervise cases involving fatalities at its facilities amid the COVID-19 pandemic.
The firm’s employees have been granted permission by lower courts to initiate lawsuits against it in state courts.
Tyson Foods, Inc. (NYSE:TSN) maintains the belief that these actions fall under federal jurisdiction due to the directive issued by the Trump Administration, which mandated the continued operation of food factories throughout the early stages of the epidemic.
AQR Capital Management, led by Cliff Asness, holds the position of the primary investor in Tyson Foods, Inc. (NYSE:TSN), with a substantial investment amounting to $243 million, which is represented by a total of 3.9 million shares.
Final Thoughts
Food stocks that are generally seen as having the best prospects attract the type of investors who take a more conservative approach and place a higher value on dividend income.
However, it is essential to have a solid understanding of the potential risks involved before making any stock investments related to the food industry.
These threats involve several different aspects, including the ever-changing preferences of customers and the possibility of facing impediments that may reduce their generally extremely slim margins of net income.
When making judgments about the selection of food stocks for investment, it is desirable to favour those that possess powerful brand recognition, price influence, a track record of operational proficiency, and substantial scale that can assist the production of operational leverage.
This is because these characteristics are more likely to result in more operational leverage.
The following food stocks are projected to produce sufficient returns in a manner that is both sustainable and profitable over a lengthy period.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.
