While food demand is increasing, rising shipping rates and soaring commodity costs have caused food prices to soar. According to the United Nations, world food prices have surged to their highest level in more than a decade, driven by robust demand and lackluster harvests. Also, according to the FAO Food Price Index, prices increased for the third consecutive month in October.
The demand for food is expected to increase further during the holiday season, starting with Thanksgiving next week. According to a Global Industry Analysts Inc. report, the global foodservice industry market is expected to reach $4.10 trillion by 2026.
So, we think it could be wise to bet on fundamentally sound food stocks John B. Sanfilippo & Son, Inc. (JBSS), HF Foods Group Inc. (HFFG), and Lifeway Foods, Inc. (LWAY) to capitalize on the increasing food prices.
John B. Sanfilippo & Son, Inc. (JBSS)
JBSS is a processor and distributor of peanuts, pecans, cashews, walnuts, almonds, and other nuts. The Elgin, Ill., company’s nuts are sold under various brands, including Fisher, Orchard Valley Harvest, Squirrel Brand, Southern Style Nuts, and Sunshine Country.
For its fiscal first quarter, ended September 23, 2021, JBSS’ revenues increased 7.6% year-over-year to $226.30 million. The company’s net income increased 50% year-over-year to $19.20 million. Also, its EPS increased 49.5% year-over-year to $1.66.
Analysts expect JBSS’ EPS and revenue to increase 8.9% and 3.9%, respectively, year-over-year to $5.02 and $914.90 million. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 10.8% to close yesterday’s trading session at $84.49.
JBSS’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
HF Foods Group Inc. (HFFG)
Greensboro, N.C.-based HFFG serves Asian restaurants, primarily the Chinese restaurants based in the Southeastern, Pacific, and Mountain West regions of the U.S. It distributes products such as meat and poultry, Asian specialty food items like noodles and spring rolls, and regular rice, flour, sugar, and oil.
HFFG’s net revenue increased 54% year-over-year to $215.50 million for its fiscal third quarter, ended September 30, 2021. Its gross profit increased 66.6% year-over-year to $41.90 million, while its adjusted EBITDA increased 190.9% year-over-year to $17.40 million. Also, its EPS came in at $0.15 compared to a $0.1 loss per share in the year-ago period. Over the past three months, the stock has gained 49.9% in price to close yesterday’s trading session at $7.87.
HFFG’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. It has a B grade for Growth and Value. It is ranked #10 in the Food Makers industry. To check the additional ratings of HFFG (Momentum, Stability, Sentiment, and Quality), click here.
Lifeway Foods, Inc. (LWAY)
LWAY makes probiotic products. Its main products are the drinkable Kefir and the BioKefir. It also makes European-style soft cheeses, farmer cheese, white cheese, and Sweet Kiss. In addition, it operates two retail stores and a food truck under its Lifeway Kefir shop subsidiary in the Chicago, Illinois, metropolitan area. LWAY is based in Morton Grove, Ill.
On August 18, LWAY announced that it had completed the acquisition of GlenOaks Farms, Inc. in an all-cash deal worth $5.80 million. The acquisition allows LWAY to diversify its portfolio with the entry into the probiotic drinkable yogurt market. It plans to ramp up distribution and marketing efforts to reach more customers in different geographies and demographics.
For its fiscal third quarter, ended September 30, 2021, LWAY’s net sales increased 13.5% year-over-year to $29.60 million. And for the nine months ended September 30, 2021, the company’s gross profit increased 10.8% year-over-year to $22.71 million. Also, its net income for the nine months ended September 30, 2021, increased 15.3% year-over-year to $3.40 million. Over the past three months, the stock has gained 1.4% in price to close yesterday’s trading session at $5.48.
It is no surprise that LWAY has an overall A rating, which equates to a Strong Buy in our POWR Rating system. It has an A grade for Growth, and a B grade for Value, Stability, Sentiment, and Quality. It is ranked #4 in the Food Makers industry. Click here to see LWAY’s rating for Momentum as well.
Want More Great Investing Ideas?
JBSS shares were trading at $84.93 per share on Friday afternoon, up $0.44 (+0.52%). Year-to-date, JBSS has gained 14.41%, versus a 27.02% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|JBSS||Get Rating||Get Rating||Get Rating|
|HFFG||Get Rating||Get Rating||Get Rating|
|LWAY||Get Rating||Get Rating||Get Rating|