3 Food Stocks To Buy That Are More Appetizing Than The Industry

The Zacks Food – Miscellaneous industry is an integral part of the Consumer Staples sector that is a go-to place for investors even when economic conditions are not very congenial. However, the food space has been grappling with several cost-related headwinds for a while, which has kept margins of many players under pressure. Most significant among these is elevated freight costs stemming from driver availability challenges in the industry and commodity cost inflation.

Further, firms are incurring high costs related to investments to keep pace with consumers’ evolving taste and preferences. These factors along with supply-chain bottlenecks and intense industry competition have been a drag on profits for many companies. This has positioned the food industry among the bottom 11% out of all Zacks industries. Moreover, the food space has witnessed a drop of 1.1% in the past six months, against the S&P 500 market’s rise of 4.1%.

Nonetheless, every cloud has a silver lining. Likewise, there are few hidden gems in the food arena, which have defied the industry trends with their solid strategic endeavors.

Hang in There, There’s Still Hope

As input costs and freight expenses shoot up, few food companies have been hiking prices of their products. Without much retaliation, consumers are seen to absorb such price hikes for certain food products, considering their importance as a staple item. Apparently, food companies enjoy certain privileges.

Certainly, the focus on innovation, product launches, and diversification has helped many food players strengthen their portfolio, draw traffic and boost the top line. Benefits from acquisitions and alliances have been acting as major drivers as well. In fact, some players are also undertaking prudent divestitures to shift focus from underperforming areas to the ones with higher growth potential.

Additionally, many food companies are gaining from their efforts to augment organic and natural offerings in response to rising health consciousness. Encouragingly, new food products are being accepted in the market, courtesy of impactful promotional skills. To top these, stringent cost-containment efforts and efficient productivity programs are aiding a host of food players to counter the aforementioned hurdles and stand out in the industry.