Restaurants are bouncing back now that the economy is fully reopening. This is the perfect time to select some food distribution stocks for your portfolio.
There is certainly an opportunity to make money directly from restaurant stocks, yet handpicking one or two winners out of all the restaurant stocks would likely prove difficult. Instead, the better play might be investing in one or two food distribution companies that will benefit from the industry’s overarching rising tide.
Below, we shift our attention to three food distribution stocks worth considering as additions to your portfolio: Sysco Corporation (SYY), US Food Holdings Corp (USFD), and Performance Food Group Company (PFGC).
Sysco Corporation (SYY)
SYY, based in Houston, Texas, makes and distributes a wide array of food and food-related items. These deliveries are made to restaurants and other businesses in the food-away-from-home industry. All in all, SYY has more than 425,000 customers. The company has distribution facilities in the United States, Canada, Northern Ireland, the Republic of Ireland, and the Bahamas.
SYY has an overall grade of A, which translates into a Strong Buy in our POWR Ratings system. The company has a grade of B in the Quality, Value, and Growth components. Click here to find out how SYY grades in the Momentum, Sentiment, and Stability components. Out of more than 80 publicly traded companies in the B-rated Food Makers industry, SYY is ranked sixth. Click here to find more top stocks in this industry.
SYY has an elevated forward P/E ratio of 61.74. This is a concerning figure in spite of the fact that SYY is trading only $5 and change below its 52-week high of $86.73. The stock’s 52-week low is $50.03. Analysts are bullish on SYY, establishing an average target price of $89.38 for the stock. If SYY hits this level, it will have popped by more than 10%. Of the analysts who cover SYY, five rate it a Buy or Strong Buy.
US Foods Holding Corp (USFD)
USFD is a distributor of food services. The business serves restaurants, hospitals, schools, and governmental institutions. USFD has an overall grade of, which is a Buy rating in the POWR Ratings system. The company has a grade of B in the Sentiment, Value, and Growth components. If you would like to learn how USFD fares in the Momentum, Quality, and Stability components, you can do so by clicking here.
Of the 81 publicly traded companies in the Food Makers industry, USFD is ranked 11th. USFD has a forward P/E ratio of 24.39, indicating it is overpriced. USFD is currently trading about $3 below its 52-week high of $42.10.
Built-up demand for service from restaurants, employers, and other food providers outside of the home will certainly help USFD. The company generates more than two-thirds of its revenue on the web. This is precisely why Wells Fargo has put a $47 price target on the stock.
Performance Food Group Company (PFGC)
PFGC makes and distributes food. From soup to salads, dry foods, canned foods, beverages, eggs, and beyond, PFGC makes money from all different types of nourishment. In particular, the majority of PFGC’s services are centered on national and independent chain restaurants, schools, theaters, hotels, and healthcare facilities.
Of the 81 stocks in the Food Makers industry, PFGC is ranked 25th. The average analyst target price for PFGC is $49.44, while the highest target price is $56, and the lowest target price is $43.
PFGC has an overall grade of B, translating into a Buy rating in the POWR Ratings system. The company has a grade of B in the Value and Growth components. PFGC’s grades in the remainder of the components, including Momentum, Stability, Sentiment, and Quality, can be found by clicking here.
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SYY shares were trading at $81.07 per share on Wednesday morning, down $0.38 (-0.47%). Year-to-date, SYY has gained 10.44%, versus a 12.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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|USFD||Get Rating||Get Rating||Get Rating|
|PFGC||Get Rating||Get Rating||Get Rating|