The food products industry is facing the challenge of rising food prices worldwide. However, demand for convenient and easy-to-consume packaged food products remains strong. Approximately, 70% of the American diet comprises packaged and highly processed food items.
Furthermore, with increasing health awareness, the demand for organic packaged food is also surging. Diversified product portfolios of packaged food companies are luring more consumers every day. Therefore, packaged food companies should be able to survive rising food prices and perform steadily. According to Research and Markets, the global packaged food market is projected to grow at a 6.3% CAGR by 2026.
Ingredion Incorporated (INGR), WH Group Limited (WHGLY), and John B. Sanfilippo & Son, Inc. (JBSS) are fundamentally strong packaged food stocks that have suffered price dips lately. However, we believe they hold immense upside potential because of the high demand for packaged food products.
Ingredion Incorporated (INGR)
INGR in Westchester, Ill., and its subsidiaries produce and sell starches and sweeteners for various industries. It operates through four segments: North America; South America; Asia-Pacific; Europe; Middle East; and Africa.
On May 5, 2022, Jim Zallie, INGR’s President and CEO, said, “In a highly inflationary environment, we achieved significant, favorable price mix that more than offset increased input costs and contributed to 6% operating income growth. We also made progress in the quarter improving the resilience of our supply chain despite continued global logistical constraints, which enabled us to better meet customers’ changing needs.”
INGR’s net sales increased 17.2% year-over-year to $1.89 billion for the first quarter ended March 31, 2022. Its gross profit was $379 million, up 8% year-over-year. Also, its net income came in at $130 million, compared to a $246 million loss in the year-ago period, while its EPS came in at $1.92, compared to a $3.66 loss per share in the prior-year period.
Analysts expect INGR’s revenue to increase 11.4% year-over-year to $7.68 billion in 2022. Its EPS is estimated to grow 8.4% to $7.73 in 2023. In addition, it has surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has declined 4.7% year-to-date to close yesterday’s trading session at $92.08.
INGR has a B grade for Value and Stability in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It is ranked #31 out of 87 stocks within the B-rated Food Makers industry. Click here to see the additional POWR Ratings for Growth, Momentum, Sentiment, and Quality for INGR.
WH Group Limited (WHGLY)
Headquartered in Kowloon, Hong Kong, WHGLY, an investment holding company, engages in the production, wholesale, and retail sale of meat products in China, the United States, Mexico, and Europe. The company operates through Packaged Meats; Pork; and Others segments.
On March 18, 2022, WHGLY announced that its subsidiary Smithfield Foods’ unit, Smithfield BioScience, and BioCircuit Technologies, will jointly produce Nerve Tape, a medical device to enable sutureless nerve repair for traumatic injuries. Courtney Stanton, President of Smithfield BioScience, said, “Our work with BioCircuit demonstrates our expanding portfolio and the value we are creating in a variety of markets through Smithfield's vertically integrated supply chain and manufacturing expertise.”
WHGLY’s adjusted operating profit increased 28.1% year-over-year to $642 million for the quarter ended March 31, 2022. Its adjusted EPS came in at 4.51 cents, up 30% year-over-year. Moreover, its adjusted EBITDA came in at $1.08 billion, up 13% year-over-year.
For its fiscal period ending Dec. 31, 2022, WHGLY’s revenue is expected to grow 2.7% year-over-year to $28.02 billion. Over the past three months, the stock has lost 1.7% to close yesterday’s trading session at $14.51.
WHGLY has an overall B rating equating to a Buy in our POWR Ratings system. It has an A grade for Value and a B grade for Stability. It is ranked #19 in the Food Makers industry. Click here to see all the POWR Ratings for WHGLY (Growth, Momentum, Sentiment, and Quality).
John B. Sanfilippo & Son, Inc. (JBSS)
JBSS and its subsidiary, JBSS Ventures, LLC, process and distribute tree nuts and peanuts in the United States. The Elgin, Ill., company offers both raw and processed nuts. It serves retailers and wholesalers and commercial ingredient and contract packaging customers.
For the quarter ended March 24, 2022, JBSS’ net sales increased 5.1% year-over-year to $218.58 million. Its total operating expenses came in at $21.98 million, down 11.9% year-over-year. In addition, its long-term debt came in at $7.93 million for the period ended March 24, 2022, compared to $11.84 million for the period ended March 25, 2021.
JBSS’ revenue is expected to grow 5.4% year-over-year to $905.10 million in 2022. Over the past month, the stock has declined 15.1% to close yesterday’s trading session at $72.45.
JBSS has an overall B grade, representing a Buy in our POWR Ratings system. The stock has a B grade for Sentiment. It is ranked #22 in the Food Makers industry. Click here to see Growth, Value, Momentum, Stability, and Quality ratings for JBSS.
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INGR shares were trading at $90.87 per share on Friday afternoon, down $1.21 (-1.31%). Year-to-date, INGR has declined -5.27%, versus a -19.20% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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