Are you looking to diversify your investment portfolio with stable, yet potentially rewarding, stocks? The food industry might just be the place to start. In this article, we’ll explore three food stocks that could offer a treat for your investment portfolio: Cal-Maine Foods Inc. (CALM), Pilgrim’s Pride Corp. (PPC), and Tyson Foods Inc. (TSN). With the food industry projected to reach $1.5 trillion in revenues by 2025, these companies present compelling opportunities for savvy investors.
We’ll delve into recent news affecting the food products sector, analyze each company using AAII’s A+ Stock Grades, and provide insights into their value, growth, momentum, earnings estimate revisions, and quality. Whether you’re a seasoned investor or just starting, this analysis will equip you with the knowledge to make informed decisions.
Food Industry Outlook for 2025
The U.S. food products industry is on track for steady expansion, propelled by changing consumer habits and a rising desire for nutritious, eco-friendly options. According to Statista, the U.S. food market for both fresh and processed foods is predicted to hit around $864 billion in 2025, showing an annual growth rate of 4.36% from 2025 to 2030. Concurrently, food prices are anticipated to increase by 2.2% in 2025, with at-home food prices going up by 1.3%.
The restaurant and food service sector is also seeing robust growth. The National Restaurant Association projects sales of $1.5 trillion and 15.9 million employees by the close of 2025, marking an addition of about 200,000 new jobs. Furthermore, 82% of consumers are keen on ordering more delivery, boosting the demand for packaged and ready-to-eat food solutions.
Understanding AAII’s A+ Stock Grades
To effectively compare companies, a consistent and objective framework is invaluable. AAII’s A+ Stock Grades offer this by assessing companies across five critical factors: value, growth, momentum, earnings estimate revisions, and quality. This system is designed to identify stocks with the potential to outperform the market over the long term.
By applying AAII’s A+ Stock Grades, we can better understand the fundamentals of Cal-Maine Foods, Pilgrim’s Pride, and Tyson Foods, providing a clearer picture of their investment potential.
Cal-Maine Foods Inc. (CALM)
Cal-Maine Foods specializes in the production, grading, packaging, marketing, and distribution of shell eggs and egg products. They offer a variety of eggs, including conventional and specialty options like nutritionally enhanced, cage-free, organic, and pasture-raised eggs. These products are sold under well-known brands such as Eggland’s Best and Land O’ Lakes, serving major retailers and food service distributors across the U.S.
From a value perspective, Cal-Maine Foods receives an A Grade, driven by a Value Score of 82, indicating deep value. The company’s enterprise-value-to-EBITDA ratio stands at 3.9, placing it in the 9th percentile among all U.S.-listed stocks. Additionally, its price-earnings ratio of 7.1 is below the sector median of 23.3, suggesting the stock may be undervalued.
Cal-Maine also boasts a Momentum Grade of B, with a Momentum Score of 78. This reflects strong weighted relative price strength over the past four quarters, with a weighted four-quarter relative price strength of 5.5%.
The company’s Growth Grade is a C, considered average, with a five-year annualized sales growth rate of 11.3% and a consistent record of positive annual cash from operations over the past five years.
Pilgrim’s Pride Corp. (PPC)
Pilgrim’s Pride is a major player in the production, processing, and distribution of fresh, frozen, and value-added chicken and pork products. Their extensive product range includes refrigerated whole and cut-up meats, prepared foods, and plant-based protein options. Operating in the U.S., U.K., Mexico, and other global markets, Pilgrim’s Pride serves a diverse customer base, including retailers, distributors, and food service operators.
The company shines with a Quality Grade of A, underscored by a score of 93. This high grade is supported by a strong return on assets of 10.6% and an F-Score of 7, indicating a robust financial position. However, its gross income to assets ranks in the lowest 59th percentile, highlighting an area for potential improvement.
Pilgrim’s Pride also earns a Value Grade of B, with an enterprise-value-to-EBITDA ratio of 5.4 and a price-to-sales ratio of 0.69, placing it favorably in terms of valuation. The company’s Momentum Grade is an A, reflecting very strong momentum with a weighted four-quarter relative price strength of 8.9%.
Tyson Foods Inc. (TSN)
Tyson Foods operates globally through segments like beef, pork, chicken, and prepared foods. They process cattle, hogs, and chickens, offering a wide range of products from fresh meats to fully cooked items under brands like Tyson, Jimmy Dean, and Hillshire Farm. Tyson Foods serves a broad spectrum of customers, including grocery retailers, wholesalers, and food service providers.
Tyson Foods holds a Quality Grade of B, supported by a solid return on assets and an F-Score of 7. The company’s Growth Grade is an A, driven by consistent positive annual cash from operations over the past five years and a five-year annualized sales growth rate of 4.7%.
An Earnings Estimate Revisions Grade of A indicates very positive sentiment, based on recent earnings surprises and upward revisions in consensus earnings estimates for the current fiscal year. This suggests growing confidence in Tyson Foods’ future profitability.
Final Thoughts
Investing in food stocks can be a strategic move, especially given the consistent demand and evolving trends in the food industry. Cal-Maine Foods, Pilgrim’s Pride, and Tyson Foods each present unique strengths and opportunities for investors.
Cal-Maine Foods offers deep value and strong momentum in the egg and egg products market. Pilgrim’s Pride stands out with high-quality products and robust financial health. Tyson Foods combines solid growth with positive earnings estimate revisions, reflecting strong investor confidence.
Before making any investment decisions, conduct thorough due diligence to ensure these stocks align with your financial goals and risk tolerance. Consider consulting with a financial advisor to tailor a strategy that suits your individual needs. By staying informed and making strategic choices, you can potentially reap the rewards of investing in these food stocks.
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