The U.S. packaged food industry appears to be on a roll, courtesy of the rising demand for essentials amid the coronavirus-led stockpiling as well as increased at-home consumption. Well, the stay-at-home orders and other social distancing measures issued in March have highlighted a paradigm shift in consumer spending patterns, including increased buying of packaged food and related items. With more Americans staying at home, food consumption and demand has gone up significantly.
Incidentally, the ready-to-cook and other packaged food and beverage items are moving off the shelves faster than usual, whereas away-from-home food options have been off the table. Increased stay-at-home, work-from-home and dine-at-home trends have majorly stimulated demand for packaged food products, as they are easy to make, comfort food and also considered safer compared to outside food. Additionally, these non-perishable items can be piled up and stored, saving consumers from going out to buy food too often.
Limited shopping trips but a larger basket size have caused many retailers, supermarkets and mass merchants to see the burgeoning demand for various grocery items, including packaged food products. In fact, these products are also seeing a solid demand spike on the online platform.
Packaged Food Space Holds Solid Potential
Certainly, such trends have been working well for a number of packaged food players like Campbell Soup CPB Conagra Brands CAG and Kraft Heinz KHC, to name a few. We note that these players belong to the Food – Miscellaneous industry, which is currently ranked #61, placing it among the top 24% of more than 250 Zacks industries. Impressively, the recently reported results of the above-mentioned companies reflected increased demand amid the pandemic. And with the second wave of the crisis setting in, we expect such trends to continue at least in the near term.
Apart from this, packaged food players have been gaining from their concerted brand-building efforts like innovation and efficient marketing strategies. Further, their efficient supply-chain networks have been supporting their operations amid the crisis.
Clearly, the U.S. packaged food space appears to be in good shape and presents solid opportunities in the current situation. In fact, the packaged food market is anticipated to see a stable growth rate over the 2020-2026 period, per a Berkshire Hathaway business wire.
All said, here we have brought focus on four stocks from the packaged food market, which carry a Zacks Rank of #1 (Strong Buy) or 2 (Buy) and are well placed to capitalize on the favorable demand situation. Encouragingly, these stocks have returned at least 10% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
4 Stocks You Must Have
United Natural Foods, Inc. UNFI offers grocery and general merchandise, perishables and frozen foods, sports nutrition and nutritional supplements, to name a few. Demand for United Natural’s products shot up in mid-March and remained high, thereby boosting its sales and earnings in the third quarter of fiscal 2020. Apart from this, integration synergies related to SUPERVALU are aiding the company’s performance. United Natural presently sports a Zacks Rank #1 and a VGM Score of A. Shares of the company have soared as much as 89.1% in the past three months.
B&G Foods, Inc. BGS boasts a robust portfolio of shelf-stable and frozen food products in the United States, Canada and Puerto Rico. This Zacks Rank #1 stock has surged 45.4% in the past three months and been witnessing a rapid increase in demand for its products since the second half of March 2020. Apart from this, the company has long been gaining on strength of its Green Giants brand. B&G Foods has a trailing four-quarter positive earnings surprise of 5.4%, on average. Markedly, the company has a VGM Score of B.
Flowers Foods, Inc. FLO is a packaged bakery products maker in the United States. The company is benefiting from solid demand due to the coronavirus-led stockpiling and higher at-home consumption. Flowers Foods has a VGM Score of A and a trailing four-quarter positive earnings surprise of 5.7%, on average. Additionally, this Zacks Rank #2 company has gained 14% in the past three months.
The Hain Celestial Group, Inc. HAIN produces, distributes, markets and sells various natural and organic food as well as personal care products, with operations in North America and Europe. The company’s products also include plant-based beverages and frozen desserts, flour and baking mixes, cereals, condiments, cooking oils, bread, pasta, instant soups, and infant food, among others. Hain Celestial has a trailing four-quarter positive surprise of 9.9%, on average. This Zacks Rank #2 company has returned 23.6% in the past three months.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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