As the summer sun beckons and appetites rise, food stocks are set to sizzle in June 2024. With the promise of heightened consumer spending, savvy investors are eyeing the cream of the crop to beef up their portfolios. The allure of food stocks lies in their fortitude—a balm of stability in the tempestuous waters of the market.
The Federal Reserve’s dovish stance and the buoyant U.S. consumer data are like gusts propelling the sails of food stocks. With an interest rate cut on the horizon and economic growth in the air, the season is ripe for plucking these delectable investments.
June unfurls its banner, rallying investors to dine at the table of high-quality food stocks. Among the array of choices, three titans stand tall, poised to tantalize the taste buds of shareholders with a promise of sumptuous returns.
Lifeway Foods (LWY)
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Lifeway Foods (NASDAQ:LWY) emerges as a titan in the realm of kefir—nature’s elixir—with a burgeoning market eager to lap up its probiotic offerings. A recent study hinting at the gut-transforming magic of Lifeway’s kefir in children with ADHD serves as a beacon, illuminating the path to health and wellness.
In the first quarter of 2024, Lifeway’s coffers swelled by 17.8%, a testament to the growing appetite for kefir. The company’s 18th consecutive quarter of growth has endowed it with a gross profit margin of 25.8%, an enviable feast for investors.
While the stock may have stumbled from its peak, there’s a silver lining in the clouds. The diluted EPS has soared by 167%, hinting at a feast awaiting patient investors. With analysts predicting a tantalizing 90% upside, the table is set for a grand feast.
Darden Restaurants (DRI)
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Darden Restaurants (NYSE:DRI) commands a legion of diners across its gastronomic empire, boasting stalwarts like Olive Garden and LongHorn Steakhouse. A recent feast of earnings saw total sales leap by 6.8%, buoyed by the addition of new dining oases.
The culinary czar serves up a platter of delights, with adjusted diluted net EPS surging by 12%—a delectable treat for investors. Reinstating dividends after a temporary hiatus during the pandemic and launching a share repurchase program worth $1 billion, Darden Restaurants exudes confidence in its culinary prowess.
Despite a robust rally from the depths of March 2020, Darden Restaurants is a savory proposition with a P/E of 17.24x. If the reopening fervor persists and sales rebound vigorously as anticipated, investors can anticipate a delectable slice of the pie in the forthcoming earnings.
The Flavorful Rise of Ingredion Inc (INGR)
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Ingredion Inc (INGR) is a culinary magician, stirring up the markets with its globally acclaimed ingredient solutions. Fueling the demands of modern consumers, Ingredion caters to the evolving tastes by offering a cornucopia of high-growth specialty food ingredients. From tantalizing plant-based proteins to recently expanded natural sweeteners and clean-label starches, Ingredion is at the forefront of culinary innovation high on flavor and quality.
In its recent earnings performance, Ingredion sprinkled a dash of success with a 13% increase in adjusted EPS, boasting an EBIT margin as savory as a gourmet dish at 11.22%. Despite facing challenges from foreign exchange fluctuations and parting ways with its South Korean business, the company remains confident in its outlook. Ingredion anticipates a rise in operating income at a low to mid-single-digit rate, elevating its full-year 2024 guidance like the aroma of a delightful feast. Reflecting its resilience, the Return on Capital Employed (ROCE) spiked to an impressive 23.79% from a comparative figure of 15.18%.
Traded at a modest P/E ratio of 11.52x, the delectable Ingredion stock offers a tempting value proposition in contrast to the industry’s price-to-earnings average of 18.23x. For investors craving a taste of the stable food ingredients space, analysts foresee a mouth-watering 12% upside potential in this dividend-boosting gem.