An ideal company is the one whose demand either grows over the years or remains constant, at the very least. It is, however, almost impossible to find a stock as solid as the one we’re going to tell you about. Most people stray farther away, searching for an ‘ideal stock’ while overlooking the best option lying right in front: The food sector.
The food industry comprises businesses that mainly sell food and nonalcoholic beverages. It includes grocery stores, food distribution companies, and businesses that sell consumer staples that people eat or drink. It is obvious why food products are such an excellent investment option: Every individual wants food to survive, and its demand only increases as the population grows.
6 Canadian Food Stocks You Should Invest In
Here are six food stocks with the most promising growth prospects for Canadian investors looking for stable investment options.
Premium Brand Holdings (TSX:PBH)
Premium Brands Holdings Corp owns a diverse portfolio of premier specialty food manufacturing and unique food distribution companies with operations in Canada and the United States. It employs 11,676 employees and operates in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada, and Washington State.
Premium Brands is involved in specialized food production, premium food distribution, and wholesale enterprises. Specialty Foods, Premium Food Distribution, and Corporate are the company’s business segments. The Specialty Foods segment includes the company’s specialty food production industries, which account for roughly two-thirds of total revenues; the Premium Food Distribution sector comprises the firm’s distribution and wholesale businesses; the Corporate sector encompasses the company’s head office activities, including its accounting and information management. In addition, it is divided into two geographical segments: the United States and Canada.
Premium Brands has earned the reputation of being a “serial buyer” since it has made almost two acquisitions per year starting from the year 2006. Consequently, the company’s earnings have been rapidly expanding, so much so that its CAGR (compound annual growth rate) has been more than 50% during the previous five years.
These facts, coupled together with the almost five-fold increase in the price of food stocks, render analysts really optimistic about the stock moving forward. Premium Brands Holdings Corp. is expected to expand by 13.73 percent in 2021 and 7.89 percent in 2022.
Maple Leaf Foods (TSX:MFI)
Maple Leaf Foods Inc. is a Canadian carbon-neutral, packaged meats and food industry. Agribusiness is also a part of the company’s activities, providing cattle to the meat products industry. The firm is among the largest consumer packaged goods sellers, employing 13,500 people around the globe. It sells prepackaged meats and meals, raw pork, poultry, and turkey goods under trusted brands, including Maple Leaf ®, Maple Leaf Prime ®, Maple Leaf Natural Selections ®, Schneiders ®, Schneiders ® Country Naturals ®, Mina ®, Greenfield Natural Meat Co. ®, Lightlife ® and Field Roast™. The largest markets for this industry are Canada, the United States, Japan, and China, which account for the majority of the company’s revenue.
On February 24, the business released its final set of 2021 results. In 2021, sales climbed 5.1 percent, year on year, to $4.52 billion. Its Meat Protein Group increased sales by 8.1 percent, while its Plant Protein Group decreased sales by 4.7 percent. Regardless, Maple Leaf’s move towards plant-based foods remains an encouraging juncture for the company in the future.
The company promises a dividend yield of 2.828%, paying a quarterly dividend of 0.20 CAD per share. Maple currently holds a market capitalization of 3,405,686,161. Analysts predict a boom in the share prices, although Maple Leaf shares have fallen 5.6 percent in 2022 as of March 7. However, the company is still up 7.2 percent year on year.
Loblaw Companies (TSX:L)
Loblaw Companies Limited is Canada’s largest retailer, offering groceries, pharmacies, health and beauty items, garments, retail store goods, financial services, and digital cellular products and services. Loblaw, its franchisees, and associate-owners employ around 215,000 full- and part-time workers across more than 2,400 shops, with the most extensive retail network in Ontario and significant spread in Quebec and British Columbia, making it one of Canada’s largest private-sector employers.
Loblaw, No Frills, the Real Canadian Superstore, and Maxi are established food companies this corporation owns. It expanded into the pharmaceutical business in 2014 by taking over Shoppers Drug Mart. It also manages a financial-services company, providing credit card services, safe investment certificates, and a PC Optimum reward program. George Weston Limited is the firm’s most dominant stakeholder, owning about 52.6 percent of the company’s shares.
If you want proof of Loblaw’s capacity to prosper through recessions, only look to the 2008 global financial crisis and COVID-19 epidemic. At the apex of the 2008 financial crisis, the stock plummeted from the high $30s to $23, and it quickly recovered to pre-crash levels within a few years only. However, during the COVID-19, the stock price actually soared because of frenzied purchasing by buyers. Currently, the company holds a market capitalization of 38,849,267,942 and pays a quarterly dividend of 0.365 CAD per share.
Tyson Foods Inc. (NASDAQ:TSN)
Founded in 1935 and headquartered in Springdale, Arkansas, Tyson Foods is the leading producer of processed chicken and beef in the United States and employs 137,000 people across the globe. It is also the biggest seller of processed pork and protein-based goods under major brands like Tyson®, Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, Aidells®, ibp®, and State Fair®, to mention a few.
Tyson sells 81% of its goods through different channels in the United States, including retailers (47% in fiscal 2021), food service (32%), and other packaged food and industrial enterprises (10 percent ). Furthermore, exports to Canada, Mexico, Brazil, Europe, China, and Japan account for 11% of the company’s income.
Early during COVID-19, the meat sector was in disarray because of viral outbreaks forcing the closure of certain processing factories. Although the crisis is over, Tyson’s share price remains low. The meat processor’s stock dropped roughly 30% in 2020, but the company’s long-term prospects remain promising because meat demand is ordinarily consistent, if not growing. It is among the biggest meat producers and sellers, with a market capitalization of 33,674,882,734.
Metro Inc. (TSX:MRU)
Metro is one of Canada’s leading supermarket chains in Québec and Ontario, totalling an annual sales revenue of $18 billion. As a retailer, franchisor, distributor, and manufacturer, the company operate/services a network of approximately 950 food stores under various grocery banners such as Metro, Metro Plus, Super C, and Food Basics. In addition, with the purchase of Jean Coutu in 2018, it now has a sizable pharmacy presence of approximately 650 drugstores primarily under the Jean Coutu, Brunet, Metro Pharmacy, and Food Basics Pharmacy banners, employing over 90,000 people.
It employs various business methods, although it is most often a retailer, owning individual locations, or a franchiser, licensing its trademarks and selling items to franchisees. In addition, the company serves as a distributor, utilizing its supply chain expertise to help smaller neighbourhood grocery stores. Most of its activities are concentrated in Quebec, with more than 70% of its owned and franchised grocery and medicine stores.
Metro has been the most dependable food stock in Canada for dividend income, seeing astonishing growth for the past 26 years. The dividend growth rate for the past five years averaged 14.2 percent. Although it currently stands at 12%, which is less than its five-year average, it is still rising at a fair rate. As of 2022, Metro pays a distributive of 0.275 CAD per share, promising a dividend yield of 1.601%.
Empire Company (TSX:EMP.A)
Empire Company Limited is a Canadian corporation based in Stellarton, Nova Scotia, dealing in food retailing, investments, and other activities. The food retailing segment, operated by Empire’s affiliate Sobeys, accounts for approximately all of the company’s revenue. This sector owns, affiliations, or franchises over 1,500 shops in ten provinces, operating under retail names such as Sobeys, Safeway, IGA, Foodland, FreshCo, Thrifty Foods, and Lawton’s Drug Stores, and several retail gasoline stations.
Crombie REIT, an open-ended Canadian real estate investment trust, and the Genstar Development Partnership are among the investments under the company’s investment and other activities sector. Empire and its subsidiaries, franchisees, and affiliates employ roughly 134,000 people and have annualized revenues of approximately $29.2 billion and assets under management of about $16.4 billion.
The stock of Empire Company has increased by 10% year to date, up 15% since the same time in 2021. It pays a $0.15 quarterly dividend per share, equating to a 1.409 percent yield.
It holds a market cap of 11,268,308,048, one of the highest among Canadian companies. The earnings per share of 2.78 and the P/E ratio of 15.30 make it a stable investment option.
Why You Should Invest in Food Stocks in Canada
Frozen foods, grocery products, and food processing units are some of the businesses that showed the fastest growth during the COVID-19 and post-pandemic times. Therefore, it is understandable as grocery retail panders to a broader market.
However, the food industry evades the one fear most successful businesses hold: Accounting anomalies. Meaning that not only does the sales revenue increase for such companies, but the consequent cash flows also surge, resulting in a well-rounded performance of such stocks on the stock markets and the Canadian Stock Exchange.
The Bottom Line
Growth metrics and analysts are equally optimistic about this sector as a sustainable investment opportunity. As a result, investors who want to rely on their diversified investment portfolio for passive income should definitely consider investing in these companies.
Best Canadian Food Stocks
Two product lines are under development for infants (1-2 years) and children (3-12 years). As a result, Nutrition Plus has developed a plant-based baby food that uses almonds, buckwheat, tapioca, dairy products and soy to achieve nutritional value equivalent to natural breast milk.
The food industry consists of companies focused on providing food and soft drinks. Goodfood Market Corp. (Mira VII Acquisition Corp. or Mira VII) is a Canadian-based company active in the meal industry.
Jamieson Wellness (JWEL) $1.37 billion 52 The company designs, manufactures, distributes, sells and markets natural health products in Canada. MTY Foods (MTY) 16.9 billion dollars 17.67 The company is a franchisor in the restaurant industry in Canada and the United States. Maple Leaf Food (MFI) $3.09 billion MFI is active in the consumer protein company.
As a result, the food and beverage sector on the stock exchange is often seen as a defensive area. Loblaw operates in two operational segments, of which 98% are retail consisting of food and drug stores, pharmacies, clothing and general merchandise, and financial services (credit card services, insurance, brokerage services, deposits insurance, etc.) Grocery retailing is the largest business, accounting for 70% of total retail sales, with drugstores accounting for the remainder.
When investing in food stocks, you need to know their role in food production and the risks involved. Large Canadian food stocks have historically performed well in poor and strong economies due to companies adopting low-margin, high-volume strategies. Restaurant stocks include stocks in full-service restaurants, fast-food restaurants and snack bars.
Food stocks are stocks of companies involved in producing and transporting food from farms to the stomach. The industries that keep the world’s food supply running are indispensable to daily life. Food is such a necessity that investing in food stocks can sound like a lucrative venture.
Every food and drink stock brings something different to the table (pun intended). This article looks at three Canadian stocks that need to focus on food and grocery and investors in 2021. The three largest food stocks have the best value, the fastest growth and the most extraordinary dynamism.
Alimentation Couche-Tard Inc. is the only stock with international exposure, making it my number one dividend-only growth stock in the industry because it excels at integrating and acquiring companies. The categorization of each sector or industry is regulated by the Global Industry Classification Standard (GIC), and they have decided to include couche tard alimentation in the food industry. Meats Inc is a food company that manufactures, markets and sells vegetable meat products in the United States.
These Canadian companies have solid growth prospects, which is currently supporting the uptick in their shares—the most popular Canadian food and beverage manufacturers on this list.
According to Statista, the revenue of the US food market in 2020 amounted to 924.39 million dollars and is expected to grow by 1.8%. The growing health-conscious population has led to vegan supplies and organic food becoming increasingly popular with similar certainty. Last year, the plant-based protein industry grew faster than meat, going public with a market capitalization of $10 billion.
You can find more details about Beyond Meat and its IPO in a recent article titled Digging into the Plant-Based Meat Craze. This year, the share prices of several listed plant protein companies have soared despite reporting heavy losses and significant investments in research and development, production facilities and partnerships.
The stock market can give you outrageous returns in this way. Goodfood Market Corp. Stephen Takacsy, B. Eng., MBA, 2021-06-23. A high value means that the expert recommends buying the stock; a low value means selling the stock.
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