Taking advantage of the product with the strongest demand in the world, food companies are often very solid performers. During the instability that Wall Street has faced since the global economic crisis, many in the food sector have still provided strong gains for investors. For anyone looking to gobble up some nice returns, five food stocks to consider are Hormel Foods Corp (NYSE:HRL), General Mills Inc (NYSE:GIS), Kellogg Co (NYSE:K), ConAgra Foods Inc (NYSE:CAG) and Campbell Soup Co (CPB).
Hormel Foods Corp
Austin, MN-based Hormel has been in the food business since 1891, offering a variety of meat and food products. The company has recently had great success with its entry into the Mexican food market, thanks to its MegaMex brand. Hormel reported 150% growth in MegaMex in just two years, adding to the company's record success. Currently trading around $29 per share, the company is close to breaking through its 52-week range of $ 25.24 - $30.50, while paying a $0.60 dividend for a yield of 2.1%.
Hormel is positioned to see additional gains this year. The share price recently crossed over both its 50-day and 200-day moving averages, suggesting a bullish rise. The company has a price to earnings ratio over 16, while reporting a quarterly revenue growth of 2 percent. The company has a reasonable payout ratio of just 29%, while building up nearly $400 million in levered free cash flow. With the success of its MegaMex line in the United States and a growing international presence, Hormel is in a strong position for investors seeking new holdings.
General Mills Inc
General Mills is headquartered in Minneapolis, MN and has manufactured and distributed retail and institutional food products since 1928. Shares of the $26 billion company are currently trading near $40 each, close to the top of its 52-week range of $34.64 to $41.06. The stock has a one-year target of $42.19 and pays an annual dividend of $1.22 for a yield of 3.1%.
After posting elevated results in its 3rd quarter accounts receivables, some analysts were concerned about General Mills' stability. Those concerns appear to be unfounded as the company maintains a solid price to earnings ratio of 17, a revenue growth of nearly 14%, $1.35 billion in free cash flow and a very healthy beta of 0.13. With its handsome dividend and potential rise in share price, now is a good time to consider buying General Mills.
One of the best-known brands in the food sector is also one of the better investments. Battle Creek, MI-based Kellogg Co specializes in ready-to-eat cereal and convenience food products. Founded in 1906, the company focuses primarily on the North America, Europe, Latin America, and the Asian Pacific markets. Kellogg is currently trading around $50.50 per share, below the midpoint of its 52-week range of $ 48.10 to $57.70. The company pays a very nice $1.72 annual dividend, creating a solid yield of 3.4%.
After a good 2011, it looks like 2012 is going to be another strong year for the company. Kellogg exceeded analysts' expectations last quarter, with effective earnings of $0.64 per share; this was nearly 25% higher on a year-to-year basis, helping to push the company's gross profit to $6 billion. Seeing growth in its operations in Asia and the Americas, the company is a solid buy, thanks to its growing share price and strong dividend.
ConAgra Foods Inc
Operating both the consumer foods and commercial foods sectors, Omaha, NE-based ConAgra Foods is not only a solid performer in the industry; it is very good on Wall Street as well. Performing well in a difficult 2011, the company is primed to grow its business in 2012. ConAgra stock is currently trading around $27 per share, near the top of its 52-week range of $ 22.20 - $27.34. The company has a one-year target of $32 and pays a dividend of $0.96, creating a yield of 3.6%.
ConAgra Foods recently announced the acquisition of Del Monte Canada. This purchase was made from on-hand cash, and will allow the company to expand into canned fruits, tomatoes and vegetables. Last year, ConAgra had a quarterly revenue growth of 8.1% and a price to earnings ratio of 15.62. The projected rise in share price is supported by the fact that its current price is trending bullishly above both its 50-day and 200-day moving averages. With the expansion of its portfolio and a favorable share price trend, ConAgra looks to be a buy in 2012.
Campbell Soup Co
Camden, New Jersey's Campbell Soup Co has been in business since 1869, and the company manufactures and markets condensed soups, sauces and other products to Europe, Latin America, the Asia Pacific, and Canada. Another very good dividend payer, Campbell Soup offers an annual payout of $1.16 per share, for a yield of 3.6%. Currently trading around $31.75 per share, it is below the midpoint of a 52-week range of $ 29.69 - $35.66. The one-year target for this stock is $32.83, which represents a potential increase of about 4%.
Although it underperformed the market in 2011, analysts are rating Campbell Soup Co as a buy for 2012. Trading at about 12.6 times its one-year estimate Campbell is expected to grow 6.3% for the next five years. With this steady growth, rising share price and attractive dividend, Campbell Soup is a tasty choice for a new holding.
Savoring Great Food Stocks
As the economy continues its slow climb out of the difficulties that have been plaguing it for the past five years, the pre-packaged food sector is expected to climb as people watch their eating expenses. Right now is a good time to find solid investments in the industry, and companies like Hormel Foods Corp, General Mills Inc, Kellogg Co, ConAgra Foods Inc and Campbell Soup Co all represent enticing potential acquisitions.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.