9 Thanksgiving Stock Ideas for Hungry Investors

In light of the Thanksgiving holiday, we asked several leading newsletter advisors, and contributors to MoneyShow.com, for some favorite ideas in the food, drink and dining sectors. Chloe Lutts Jensen, Cabot Dividend Investor Hormel Foods is best known for their meat products, including their pepperoni, bacon, deli meats, chili and prepared meals. But the company also owns a range of other brands you might know from your grocery store, including Jennie-O, Applegate Organics, Columbus and SPAM. Hormel is increasingly expanding into other areas of the grocery store as well, with strategic acquisitions like Skippy peanut butter, Justin's nut butters, Wholly Guacamole dips, and Muscle Milk beverages. Hormel has paid dividends since 1928 and has increased the dividend every year for 51 years, making the stock a longtime member of the Dividend Aristocrats. Over the past five years, Hormel has increased the dividend by an average of 17% per year. Hormel's long dividend history and low payout ratio earn the stock a perfect Dividend Safety Rating of 10 out of 10. Combined with analysts' forward earnings estimates Hormel earns a nearly perfect Dividend Growth Rating of 9.8 out of 10. These numbers indicate that this is a safe investment for anyone looking to secure a reliable, long-term, gradually rising income stream. Founded in 1889, McCormick & Co sells grocery products including spices, condiments, oils, broth, recipe mixes, salad dressings, baking ingredients and more. Its brands include McCormick, Old Bay, Zatarain's, Thai Kitchen, Club House and Lawry's. Last year, McCormick acquired the French's and Frank's RedHot brands from Reckitt Benckiser. Consumer products make up about 62% of sales. Food service and food and beverage companies account for the rest. In addition to commercial versions of the above products, McCormick makes custom flavor solutions for food companies, like the powder that can make a potato chip taste like sour cream and onions or BBQ. The spices company is also a Dividend Aristocrat. Its steady revenue stream translates into equally steady dividend payments: the company -- yielding 1.4% -- has paid dividends since 1925 and has increased the dividend every year for 31 straight years (making it a Dividend Aristocrat). Groceries are the classic counter-cyclical investment and conservative stocks have seen strong inflows ever since the correction started. I wouldn't load up here, given the market environment, but I'll keep my rating (which is aimed at long-term investors) at a Buy. I think consumer staples stocks might be in the early stages of a long-term period of outperformance. Long-term investors can continue to buy McCormick & Co. on pullbacks. Mark Skousen and Jim Woods, Fast Money Alert Restaurant chain Wingstop is gobbling up the fast money and giving this stock wings. In fact, dealing in wings is this company's business. The company owns and franchises more than 1,100 wing-focused restaurants across 42 states and nine countries. Those stores have been very profitable, with the company growing earnings per share at a very impressive 26% per year over the past three years. That kind of earnings growth has helped this stock outpace 93% of all publicly traded companies in both current and annual earnings growth. As for share price performance, the stock has surged about 145%, a move that's outpaced 98% of all other publicly traded companies. This sector, and this stock, is where the fast money wants to go. The broad market weakness has put pressure on the stock. However, it remains above our protective stop at $58.30, so we continue to hold the shares. John Buckingham, The Prudent Speculator Tyson Foods fell after the protein producer reported fiscal Q4 financial results. Tyson has been hit hard this year as concerns have mounted over its products being targeted in global trade disputes, a strong U.S. dollar and mounting inventory of meats in the U.S. While the firm reported better-than-expected bottom-line results for Q4, revenue came in light. Management announced adjusted EPS of $1.58, 17% above consensus forecasts of $1.35. Revenue of almost $10 billion fell short of expectations by more than $280 million. Looking ahead, the company predicted that its fiscal 2019 adjusted EPS would come in between $5.75 and $6.10, which is comparable to fiscal 2018 results. The impact of trade disputes (hurting pork), heavy supplies of beef as cattle herd sizes normalize (driving prices down) and near-term headwinds on chicken as competing meat prices like beef remain meaningfully cheaper than normal should continue to impact Tyson. We think Tyson's near-term challenges will be concentrated in the chicken and pork segments. Longer term, however, we believe that chicken can take share from other protein sources as it offers a relatively better cost and health profile to consumers. We also think that prepared foods and increasing protein consumption around the globe, especially in emerging economies, provide a solid long-term footing for top-line growth. The stock currently trades at a miniscule 10.3 times next-12-month adjusted EPS expectations and carries a 2.5% dividend yield. All things considered, we have adjusted our target price down to $85. Jim Powell, Global Changes & Opportunities Report Starbucks was doing well before the market plunge, and the shares showed especially strong support during the market rout. Once the downdraft ends, the company's rally is likely to resume. Meanwhile, the company is branching out from opening brick and mortar locations (28,700 so far) to offering its most popular products in grocery stores and other food outlets. A deal with Nestle S.A. of Switzerland -- the world's leading food and beverage retailer -- also promises to be quite profitable for Starbucks. Perhaps the most promising development of all, the company now holds an impressive 60% of the coffee market in China -- that has the world's largest population of people who are just being introduced to the beverage. On the downside, Starbucks is seeing some weakness in repeat visits to its stores. However, the company is no longer solely dependent upon opening and running cafes to grow its business. I think Starbucks will remain a profitable investment for many years. Mike Cintolo, Cabot Top Ten Trader Keurig Dr Pepper looks like a special situation that is back at new highs despite the wobbly market, thanks to some intriguing potential synergies, the prospects for long-term growth and a dash of M&A activity. The new, combined company (the merger was completed in the summer) is a top-10 player among U.S. food and beverage firms, as it's a leader in both coffee (Keurig) and flavored drinks (with numerous top brands like 7Up, Mott's, Schweppes, Canada Dry, A&W, plus the namesake brands). Of course, growth here won't be rapid (the top brass expects 2% to 3% sales growth, in line with the industry), but expects $600 million of annual merger synergies by 2021, as well as EBITDA growth of 11% and earnings growth of 16% (off a base of $1.05 per share this year) annually through 2021. The strong outlook funds a tidy dividend (2.3% annually) and some M&A, too -- the firm bought Core Nutrition in September for $435 million (bottled water, fruit hydration) to broaden its portfolio, with some rumors it also might dip a toe into the cannabis market. One other positive: Mondelez , the large confectionery outfit, owns nearly 14% of the company. There's nothing revolutionary here, but Keurig Dr Pepper could be a new emerging blue chip in the slow, steady consumer staples field. Keurig Dr. Pepper's merger was finalized in July, so anything before that doesn't really apply to the chart. We're OK nibbling on dips. Jim Kelleher, Argus Research Yum! Brands owns three of the most popular fast-food brands in the world: KFC, Pizza Hut and Taco Bell. The company and its franchisees operate more than 41,000 restaurants in 125 countries and territories. It continues to transform its business through refranchising. It also plans to lower capital spending to $100 million annually from $422 million in 2016, and to reduce annual G&A expense by $300 million. Management is targeting 2019 EPS of $3.75 and believes that it can deliver average annual returns of 15% over the next two years. We expect the company to reach these goals through continued refranchising and cost-cutting and look for at least mid-teens EPS growth in 2018 and 2019. At current prices, the stock yields about 1.6%. Doug Gerlach, Investor Advisory Service The Cheesecake Factory reported mixed third-quarter results. Sales growth of under 5% was below expectations. Comparable restaurant sales growth of 1.5% was at the low end of guidance against an easy comparison. The company attributed this to accelerated promotional activity by competitors. Wage inflation moderated in the quarter and group medical insurance costs normalized. The company also reported improvements in food costs and labor efficiency. These improvements helped drive EPS higher by 9% to $0.61. For 2018, Cheesecake now plans to open five new restaurants, down from earlier projections of six. This is due to permitting delays at its new fast casual concept, Social Monk Asian Kitchen. The opening of this restaurant has been pushed to the first quarter of 2019. With the quarter's results, the company lowered its expectations for full-year comparable sales growth to 1.5% from 1.5%-2.0%. Guidance for full-year adjusted EPS was tightened by two cents at the high and low end of the range to $2.42-$2.46, a 6% decline at the midpoint. For 2019 the company is expecting continued moderation of wage inflation. Management also indicated it expects at least 3% unit growth domestically next year, implying the opening of approximately five new restaurants. The Cheesecake Factory is a Buy up to $46. Ned Piplovic, DividendInvestor Founded in 1894, The Hershey Company manufactures and sells confectionery products. The company's share price fought against moderate volatility over the past few years and is currently trading within 2% of the price level from one year ago. The company provides its products primarily under the Hershey's, Reese's, Kisses, Jolly Rancher, Almond Joy, Brookside, Cadbury, Good & Plenty, Kit Kat, Payday, Rolo, Twizzlers, Whoppers, York, Ice Breakers, Breathsavers, Bubble Yum and Heath brands. While many companies were forced to reduce or eliminate their dividend distributions during the 2008 financial crisis, the Hershey company managed to avoid dividend cuts, paid a flat annual dividend in 2009 and resumed rising dividends in 2010. Since skipping the boost in 2009, the company has increased its annual dividend payout for the past eight consecutive years. After a decline in the first half of the trailing 12 months, the share price has recovered its losses and technical indicators suggest that the current uptrend might have a little more room on the upside. Hershey currently offers its shareholders a yield of 2.7%.

9 Thanksgiving Stock Ideas for Hungry Investors

Top financial advisors serve up their favorite ideas in the food, drink and dining sectors.

Columnist Conversation

IPO Euphoria is Here...But for How Long?

ADDED Some Lockheed Martin

Classic IPO Mixup on Zoom

COLUMNIST TWEETS

Please Join or Log In to manage and receive alerts.