Feast on These 5 Stay-at-Home Food Stock Favorites

With indoor dining off limits in many regions and more people working from home, it's little surprise that consumers are increasingly stocking up on food products and snacks for in-home meals. From cereal and soup to vegetables and pizza, several contributors to MoneyShow.com highlight some stay-at-home food favorites. Genia Turanova, Unlimited Income Kellogg Company has been making America's favorite cereals for 114 years. Brands like Frosted Flakes, Special K, and Kellogg's Raisin Bran remain some of the most popular cereals in the world. But the company has expanded into other products over the years. Today, Kellogg's top snack brands include Pringles, Cheez-It, Pop Tarts, Eggo, and Rice Krispies Treats. Kellogg's revenue stream was under pressure just a few years ago because of the declining demand for cereal. But under the new CEO Steven Cahillane, formerly an executive at Coca-Cola , Kellogg's been refocusing on its snack business, while also cutting costs and selling non-core businesses. In the midst of the pandemic, K's operations have been running smoothly. And it's set to benefit from two important factors: One is that the food business is designated essential by the government; the other is the growing demand for food consumed at home. After factoring all the necessary operating expenses, Kellogg's business easily (and steadily) generates over $1 billion in cash flow. The company's biggest brands -- which include snacks -- are still growing. In 2019, sales from its Cheez-It brand grew over 14%. Rice Krispies Treats had an even better year, as sales jumped more than 16%. Sales of Pop-Tarts jumped almost 10%. Sales growth from its other two big names -- Pringles and Eggo -- was under 3%. But both of these brands were coming off 7% growth the previous year. Kellogg's core business is humming along. And in the coronavirus-impacted world, we can expect the sales of branded snacks to improve in the quarters ahead. Smaller brands are turning into growth drivers. For example, its Morningstar Farms brand of veggie burgers should benefit from the growing popularity of meatless burgers. Its Kashi brand should continue to grow as consumers look for more natural and organic options. Management also invested heavily in the RXBAR line of protein bars, a category that still has huge long-term growth potential. Kellogg's has paid a dividend to its investors every quarter stretching back to 1925. That's 95 years of payouts! Management has also increased the dividend every year since 2005 and Kellogg is in an excellent position to keep raising its dividend for many years into the future. Emily Mirabelli, StockInvestor At-home meals are the new norm during this unprecedented quarantine, and three top stocks are helping to keep both stay-at-home diners and investors satisfied. Lately, the trend has shifted to eating at-home meals, with the stock market offering a selection of stocks that may please the profit-seeking palates of discerning investors. Campbell Soup Company has been an American staple for decades, whether it's warm soup on a rainy day, or goldfish of any flavor found in a child's lunchbox. As of late, the company is on safe ground and has seen steady growth as consumers are turning back to familiar favorites. Campbell reported its fiscal third-quarter results on June 3 and gave renewed evidence of its loyal consumer base. The company's net sales increased 15% to $2.24 billion, and its earnings per share (EPS) from continuing operations of $0.55 increased by 34%. The company expects its adjusted EPS to be in the range of $2.87 to $2.92, which indicates a 27% increase from $2.30 reported for the same period last year. Moreover, the third-quarter report showed that organic sales increased by 17% due to unexpected consumer purchasing due to the pandemic. Domino's Pizza Inc. , currently one of the largest fast-food chains, found itself effortlessly filling consumer needs during the pandemic. In its first-quarter 2020 conference call, the company announced it would be moving to a 100% contactless delivery model nationwide. In its latest efforts to accommodate consumers, it offers Carside Delivery, an option for both online and in-store purchasing. On July 16, the company announced its second-quarter 2020 financial results, serving as a testament to the uptick in at-home meals. The company reported fiscal second-quarter net income of $118.7 million, or $2.99 per share, according to CNBC. This rise is up from $92.4 million, or $2.19 per share, for the same period last year. The results beat analysts' expectations of the company reporting $2.24 per share. Domino's also beat expected net sales with a 13.4% increase to $920 million versus analysts' projections of $911.5 million. While dividend suspension is happening across the board, on July 15, the company's board of directors announced Domino's would be paying a $0.78-per-share quarterly dividend to shareholders of record, as of September 15, 2020, to be paid on September 30, 2020. Gordon Pape, The Income Investor Most companies in the food business are doing well these days and B&G Foods Inc. -- a little-known firm -- is no exception. The company produces a wide range of brands, the best-known of which are Green Giant and Cream of Wheat. Others include Back to Nature, B&G, B&M, Dash, Las Palmas, Le Sueur, Mama Mary's, Maple Grove Farms, Ortega, Polaner, Spice Islands, New York Style, and Victoria. Net sales during the first quarter were up 8.9%, to $449.4 million, and the uptrend has accelerated since then. Sales in May came in at $160.1 million, an astounding increase of 50.5% over the same period last year. The company expects net sales for the second quarter of 2020 to be in the range of $510 million to $525 million. Adjusted net income for the first quarter was $29.2 million ($0.46 per share, fully diluted), compared to $29.1 million, ($0.44 per share), for the first quarter of 2019. The increase was primarily attributable to the positive impact of the Covid-19 pandemic on the company's net sales, as well as the acquisition of Clabber Girl in the second quarter of 2019. Adjusted EBITDA as a percentage of net sales was 18% for the first quarter of 2020, compared to 18.4% a year ago. The stock pays a quarterly dividend of $0.475 per share. I don't expect any increase in the near future, but the sales growth makes the financial position of this company more attractive. The 7.2% yield says the market is still attributing considerable risk here but I like the general direction we're seeing and recommend the stock to more aggressive investors. Doug Gerlach, SmallCap Informer In the past decade, avocados have earned the name of green gold as U.S. demand for avocados has more than doubled to 2.6 billion pounds during that time period. Perhaps no company is poised to capitalize on this trend than the largest publicly traded company focusing on avocados, Calavo Growers . Calavo Growers is a global avocado industry leader and a provider of value-added fresh food. It procures and markets diversified fresh produce items, ranging from tomatoes to tropical produce such as papayas. It manufactures and distributes guacamole, guacamole hummus, and salsa under the Calavo brand name. A wholly owned subsidiary, Renaissance Food Group, markets a portfolio of healthy, high-quality lifestyle products for consumers through fast-growing brands that include Garden Highway and Chef Essentials. In the quarter ended April 30, Calavo completed the acquisition of Simply Fresh Fruit, a producer of fresh-cut fruit. The company has been integrated into the Renaissance Food Group, the fast-growing division focused on prepackaged fruits and other food items. Looking ahead, Calavo may be able to shake off the effects of the global health crisis faster than many other companies. The health benefits of avocados may well resonate with a culture increasingly interested in health and well-being. Analysts see a quick recovery for Calavo and estimate EPS of $1.96 for fiscal 2020. With EPS reaching $4.72 in five years, a future high price of $142 is achievable at a high P/E of 30. On the downside, the recent severe market low is $51. The stock is a buy up to $74 with a 10.7:1 upside/downside ratio. Adding in an average dividend yield of 1.5%, the stock could deliver an annualized total return of 20.7%.

Feast on These 5 Stay-at-Home Food Stock Favorites

These top stocks -- including the largest publicly traded company focusing on avocados -- are helping to keep both stay-at-home diners and investors satisfied.

Columnist Conversation

This Weekend on Real Money

November Jobs Report Takeaways

The Setup Into Friday's Jobs Report

COLUMNIST TWEETS

Please Join or Log In to manage and receive alerts.