As the world slowed down while the pandemic took hold, everyone still had to purchase food and these are stocks we suggest you digest!
The world has changed enormously since the pandemic broke out, but one thing remains — the need to eat! A number of restaurant stocks have taken a hit after being forced to close shop, such as McDonald’s (NYSE: MCD) and Starbucks (NASDAQ: SBUX), while other companies that produce staple items are in hot demand. However, many places are starting to open up again with social distancing measures in place, so the food industry over the next few months should experience bullish tailwinds. Here are 3 top food stocks to digest.
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This company is the market leader for its meat-alternative products. At its recent earnings call for the first quarter of 2020, Beyond Meat’s (NASDAQ: BYND) revenue jumped a whopping 141% to $97.1 million compared to the same time last year. This could be a flow-on effect from meat shortage issues caused by the coronavirus, which saw more people reach for the next best thing!
The company has also secured a number of partnerships with well-known restaurants in the U.S. and overseas, including Dunkin’ Brands (NASDAQ: DNKN), McDonald’s, Starbucks, and Yum! Brands’ (NYSE: YUM). However, Beyond Meat revealed it did see a drop in sales at the end of March because many of these popular restaurants were forced to close their doors amid the coronavirus.
Looking ahead, Beyond Meat will be partnering with Sinodis, a popular food distributor in China. This will allow the fake-meat brand to sell its products to wholesalers, restaurants, and hotels. While the stock could prove to be volatile as many companies face uncertain times ahead, it represents a good investment in the long-term.
The largest supermarket chain in the U.S. recorded a huge jump in online sales during the pandemic, up by 92%. Kroger (NYSE: KR) posted some impressive earnings recently, and its big jump in e-commerce is a reaction to more people staying inside their homes because of the coronavirus. The supermarket’s revenue also increased to $41.55 billion, compared to $37 billion at the same time last year. Much of these profits will be used to modernize the business for the future.
However, while Kroger was in high demand for products, the company spent additional money on hiring workers. It employed more than 100,000 people to ensure the shelves were stocked and clean. Kroger also spent more than $830 million on health-related services like free COVID-19 testing during the quarter.
The impressive growth for the quarter wasn’t reciprocated by investors, with the stock falling around 6.6% after the earnings report. This could be because they expect the company’s numbers to level out as the economy re-opens and tough competition from the likes of Walmart (NYSE: WMT) and Costco. The supermarket giant is focusing on improving its digital platform and private-label businesses which is part of its three-year “Kroger Restock” plan that launched in 2018.
It seems a lot of people were craving Mexican food during the lockdown, with Chipotle (NYSE: CMG) stock taking off over the last few months. Around 100 Chipotle restaurants temporarily closed because of the pandemic, but other locations were able to offer customers online orders. During the first quarter, Chipotle’s digital sales more than doubled and net sales rose 7.8% to $1.41 billion.
The company’s recent earnings topped estimates, but its fiscal first-quarter net income was $79.39 million, down from $88.13 million the previous year. Digital sales made up 26.3% of Chipotle’s quarterly earnings and it also experienced more customers signing up for its loyalty program. The restaurant now has 11.5 million members in its loyalty program and daily sign-ups are quadrupling.
Chipotle also surpassed $1,000 per share for the first time on May 19 and is one of just four restaurants to increase its valuation in 2020. The future is looking delicious for the business, with a partnership with DoorDash for delivery and in March 2020, Uber Eats. Chipotle is set to continue to grow especially while there isn’t too much competition during COVID-19.
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