8 Stocks to Snack On, From Burritos to Nuts

While indoor dining has been among the hardest hit sectors during the pandemic, snacks and comfort foods have benefited from the stay-at-home trend, as have drive-thus and food delivery. Several leading newsletter experts and contributors to MoneyShow.com highlight some favorite ideas to find profits in your pantry. Taesik Yoon, Forbes Investor John B. Sanfilippo & Son, Inc. -- a holding in our model portfolio -- processes and distributes nuts; the stock reacted favorably to its fiscal 2021 Q2 report on Jan. 27. Although net sales for the period declined 5.2% year over year to $233.6 million and came in $12.8 million below analysts' expectations, this was largely due to lower selling prices for tree nuts resulting from the pass-through of reduced commodity acquisition costs. Indeed, overall demand held up well as a solid 9.9% increase in sales volume in the firm's Consumer distribution channel (which accounted for 78.2% of total volume) more than offset volume declines that resulted from the decline in air travel, nationwide restrictions on indoor restaurant dining sales and decreased convenience store foot traffic. Combined with the benefits of the above-mentioned decline in commodity acquisition costs for tree nuts and lower interest expense, this led to a nice 13.2% rise in earnings to a record $1.72 per share, which comfortably beat the $1.52 per share consensus forecast. What's more, while the ongoing trend of people doing more cooking and baking at home clearly continues to have a favorable impact on volumes in its Consumer business, demand in its other businesses is also improving. In particular, JBSS noted that its worst-performing food service business saw sales volume down 29.4%, which is a marked improved from the precipitous 63.3% year-over-year drop it had to endure just two quarters earlier. When you couple this with the decrease in acquisition costs the company has seen for all major tree nuts, we think JBSS has put itself in excellent position to enjoy solid bottom-line growth for the remainder of the fiscal year as well. If so, we see additional upside for the stock ahead. Hilary Kramer, Value Authority Helped by its broad product line, General Mills has realized consistent results in recent years while many other food companies have struggled with changing consumer tastes and the introduction of many specialty brands. General Mills' product line is well diversified, with the company owning iconic brands, including Cheerios, Betty Crocker, Blue Buffalo Pet Food, Haagen-Dazs, Nature Valley, Yoplait, Old El Paso and Pillsbury. The current year has been exceptionally strong due to the pandemic, which has led to more at-home eating. Through the first six months of fiscal 2021, sales have increased 8% and EPS gained 21%. I think the uncertainty about how the company will do when comparisons become difficult is holding back the stock now, along with money managers' preference for more aggressive names. However, I believe the company can still earn at least $3.65 per share after the pandemic. Normalized volume gains of 1% to 2% post-COVID-19 could be enhanced by the potential of food inflation, given the U.S. government's determination to help those hurt by COVID-19 through high levels of stimulus. Therefore, longer-term mid-single-digit EPS growth is possible. Given this level of growth, the stock is very attractive at less than 16X post-COVID-19 EPS, nearly a 44% discount to the S&P 500 with minimal cyclical risks. When the current favor of aggressive name fades, General Mills should do very well. The 3.6% dividend yield will add to total returns. Doug Gerlach, Investor Advisory Service Sometimes we all need to reach for the comfort of a peanut butter and jelly sandwich. Enter The J.M. Smucker Co. , whose consumable products can be found in 90% of U.S. homes. Founded in 1897 with its headquarters in Ohio, Smucker sells a variety of packaged goods, with sales split about equally into retail packaged foods, homebrew coffees, and pet treats. Its 40+ brands include some of the most recognizable names in every one of its categories. In packaged foods, it sells Smucker's jams as well as Jif peanut butter. Coffee offerings include Folgers and Dunkin', which it sells under a license from Dunkin' Brands , which runs through 2039. In pet treats, it sells Milk-Bone, Meow Mix, and Kibbles 'n Bits. treats segment should benefit apace. Wherever Smucker plays, it plays big. 70% of sales come from categories where it is the #1 or #2 competitor. By our standards, this is a very defensive company to feature. A potential economic downturn should not hurt the company. Debt is reasonable at $5.3 billion, about 2.7x EBITDA. Free cash flow is consistently solid. It was a robust $1.3 billion over the trailing four quarters, almost 50% higher than reported net income. That level of positive cash accrual is not sustainable, but we highlight the difference as a signal of good earnings quality. The upside is not spectacular, but an investment in Smucker should deliver a consistent and satisfying result. We model 7% compound growth, with a P/E range of 15.1 to 20. Our forecast low price is $93, a 20% decline from the current price. Our high price is $192, the product of a 20x multiple on potential earnings per share of $9.59. The upside/downside ratio is 3.3 to 1. With dividends, our projected compound annual return is 11%. John Dobosz, Forbes Dividend Investor Springdale, Ark.-based Tyson Foods is one of the largest meat producers in the United States, with 35% of revenue coming from beef, 30% from chicken, and 19% from prepared foods. Revenue this calendar year is expected to grow 2.9% to $43.98 billion, with earnings up 3.4% to $5.84 per share, giving the stock a forward price-earnings ratio of 11.2. Over the past five years, the stock has traded for an average of 12 times current year earnings. Tyson trades at discounts to all five valuation multiples I consider when assessing value. It's also a dividend machine, with an ex-dividend date for the next $0.445 per share payout coming up on February 26. With $7.33 per share in free cash flow over the past 12 months, Tyson is not struggling maintain or to hike its $1.78 in annual dividends. Dividends have grown 27% annually over the past decade and at a 30.5% compound annual rate over the past five years. Meanwhile, Chicago-based Conagra Brands is a packaged food company selling to consumer and commercial markets in the U.S. and Canada. Its brands include Chef Boyardee, Hunt's, Marie Callender's, Healthy Choice, Slim Jim, Hebrew National, Orville Redenbacher's, Peter Pan, Reddi-wip, Snack Pack, Egg Beaters, and Fleischmann's. Revenue this calendar year is expected to grow 6.2% to $11.05 billion, with earnings up 14.8% to $2.48 per share. The stock yields 3.2% and trades at a 29.7% discount to its five-year average P/E ratio, and 16.9% below its five-year average price-sales ratio. Chairman Richard Lenny was a buyer at $33.70 per share. Bruce Kaser, Cabot Undervalued Stocks Advisor Following a disastrous cost-cutting strategy that left the company with diminishing relevance to consumers, Kraft Heinz is rebuilding its brands and products, led by new CEO Miguel Patricio (July 2019). The pandemic is providing a much-needed tailwind, particularly as Kraft Heinz is carrying a sizeable debt burden. The recent strong results indicate that the turnaround continues to make good progress. Adjusted earnings per share of $0.80 rose 11% from a year ago and was 8% above the consensus estimate. Revenue of $6.9 billion was 6.2% higher than a year ago and was fractionally above the consensus estimate. First-quarter guidance points to flat/positive organic sales growth and roughly 2% EBITDA growth -- fairly impressive compared to the first quarter last year, which featured the start in mid-February of the pandemic. So far, the new CEO is showing that reinvesting in the business can lead to better profits, the opposite of the company's strategy in recent years. Cash flow continues to be a key source of strength as Kraft labors under a heavy $24.9 billion debt (net of cash) load. However, that burden was reduced from $27.0 billion a year ago. If the company can continue to generate $4.3 billion in free cash flow, as it did in 2020, the debt can be whittled down without too much difficulty over the next several years. The company confirmed that it will be selling its nuts business (primarily Planters) for $3.35 billion, about 10% higher than we expected. The 15x adjusted EBITDA multiple valuation is reasonable. John Staszak, Argus Research Chipotle Mexican Grill opened its first restaurant in 1993, became a subsidiary of McDonald's in 1998, and was spun off in a public offering in 2006. Its restaurants offer quick service, but maintain traditional cooking methods and utilize high-quality ingredients. Same-store sales in the fourth quarter were helped by a 177% increase in digital orders, which now comprise 49% of revenue -- helped by third-party delivery aggregators like Grubhub and Uber Eats. We are raising our 2021 EPS estimate to $22.50 from $21.90 and setting a 2022 estimate of $29.00. Our estimates reflect continued growth in digital orders and carefully managed expenses. In 2021, we expect comps to continue to recover and market share gains, offset in part by higher labor costs and investments in marketing and technology. Our long-term EPS growth rate forecast is 25%, up from a prior 20%. We think that Chipotle possesses a healthy balance sheet ($1.1 billion in liquidity in 4Q20) and robust mobile ordering and delivery platforms that will help it to recover as the economy reopens. While some consumers may be put off by Chipotle's high prices during a period of economic weakness, we expect its strong brand to continue to attract customers, helping it to endure dining-room closures. Our long-term rating is buy. We remain confident that Chipotle can achieve its long-term goals of mid-single-digit comps, high-single-digit revenue growth, and mid-teens operating margins. Mike Cintolo, Cabot Growth Investor Near-term, Uber could easily take a breather, but there's little doubt business is headed much higher in 2021 and beyond, which should keep big investors interested. The food delivery business continues to boom, with bookings up a whopping 128% from a year ago. Uber has all the makings of an early-stage shakeout -- the stock plunged on no real news, but has rebounded beautifully thanks to some big news: The firm is buying Drizly (for $1.1 billion of cash and stock), which is a nationwide alcohol delivery service (available in 1,400 cities in the U.S.) and will be integrated into Uber Eats' offerings. One doesn't have to be a seer to imagine how this could be huge over time (Drizly reportedly grew 300% last year!), and it continues the big-picture trend of Uber being the delivery option of choice for a widening number of products (groceries, takeout, prescriptions and now alcohol). The latest quarterly report was mixed -- sales slipped 17% and actually missed expectations, while earnings and EBITDA were solidly in the red. Still, the stock continues to look great as investors are looking ahead. We'll stay on a buy rating.

8 Stocks to Snack On, From Burritos to Nuts

Experts pick their favorite comfort food stocks that have benefited from the stay-at-home trend.

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