As the Russia-Ukraine war continues amid ongoing food shortages, the cost of food in the United States increased by 8.8% in March 2022, according to the U.S. Bureau of Labor Statistics. It is the highest food inflation since May 1981. As a result, food stocks are gaining investors’ attention. This is evident from the Invesco Dynamic Food & Beverage ETF’s (PBJ) 6.5% gains over the past three months compared to the SPDR S&P 500 Trust ETF’s (SPY) 4.4% loss.
The critical reasons for rising food prices are supply chain disruptions, heavy demand for food commodities, and high energy prices. As these factors are expected to keep driving food prices in the near term, the food industry is expected to thrive. According to Valuates Reports, the global packaged food market is expected to grow at a CAGR of 5.2% by 2030.
Given this backdrop, it could be wise to bet on Thorne HealthTech (THRN), Grupo Bimbo (GRBMF), and Lifeway Foods (LWAY), which are well-positioned to capitalize on the industry’s growth. These stocks are currently trading under $10.
Thorne HealthTech, Inc. (THRN)
THRN is a science-driven wellness company that provides solutions and personalized approaches to international health and wellness. It offers various health tests, as well as develops nutritional supplements and offers wellness education solutions. It primarily serves healthcare professionals, professional athletes, and sports and Olympic teams.
On March 3, 2022, THRN announced it had acquired Nutrativa LLC. CEO of THRN, Paul Jacobson said, "The acquisition of Nutrativa enables Thorne HealthTech to leverage an innovative printing technology, helping us address consumer needs in a green, sustainable fashion, while at the same time enabling us to expand our portfolio of products and services into new target markets."
THRN’s net sales increased 37.8% year-over-year to $49.90 million in the fourth quarter, which ended December 31, 2021. The company’s adjusted EBITDA grew 274.4% year-over-year to $5.43 million, while its adjusted net income came in at $3.82 million, compared to a loss of $0.36 million in the prior-year quarter. Also, its adjusted EPS came in at $0.07 compared to a loss of $0.03 in the year-ago period.
Analysts expect THRN’s EPS and revenue to increase 210% and 34.5% year-over-year to $0.31 and $249.14 million, respectively, in fiscal 2022. Over the past three months, the stock has gained 37.9% to close yesterday’s trading session at $6.84.
THRN’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Growth and Sentiment and a B grade for Quality. THRN is ranked #8 out of 86 stocks within the B-rated Food Makers industry.
To see the additional POWR Ratings for THRN (Stability, Momentum, and Value), click here.
Grupo Bimbo, S.A.B. de C.V. (GRBMF)
GRBMF produces, distributes, and sells various bakery products. The company offers cookies, savory snacks, candy, and packaged goods. It provides its products under approximately 100 brands and has operations in 33 countries.
On April 26, 2022, Diego Gaxiola, CFO of GRBMF, said, “Our results for the quarter were outstanding, especially when we consider the tough comparison from the remarkable results in the first quarter of 2021 we are cycling, overall inflation, and the complicated operating environment in several countries. We will continue working tirelessly on pulling the right levers to offset most of these effects.”
GRBMF’s net sales increased 17.7% year-over-year to Ps.93.32 billion ($4.61 billion) in the first quarter, which ended March 31, 2022. The company’s operating income grew 2% year-over-year to Ps.8.94 billion ($442.27 million), while its adjusted EBITDA came in at Ps.11.90 million ($588.43 million), representing an 11.9% year-over-year increase.
GRBMF’s revenue is expected to be $4.89 billion for the quarter ending September 30, 2022, representing a 13% year-over-year rise. The stock surged 37.2% over the past year to close yesterday’s trading session at $2.86.
GRBMF’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. It has an A grade for Stability and a B grade for Value and Quality.
We also have graded GRBMF for Growth, Momentum, and Sentiment. Click here to access all of GRBMF’s ratings. GRBMF is ranked #2 in the same industry.
Lifeway Foods, Inc. (LWAY)
LWAY produces and markets probiotic-based products internationally. Its primary product is drinkable kefir, a cultured dairy product in various organic and non-organic sizes, flavors, and types. It sells its products under the Lifeway and Fresh Made brand names and under private labels on behalf of customers primarily through a direct sales force, brokers, and distributors.
LWAY’s net sales increased 13.5% year-over-year to $29.60 million in the third quarter, which ended September 30, 2021. Its total assets came in at $70.34 million for the period ended September 30, 2021, compared to $60.07 million for the period ended December 31, 2020. The stock has gained 26.1% over the past nine months to close yesterday’s trading session at $5.80.
It’s no surprise that LWAY has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock has an A grade for Growth and a B grade for Value, Stability, Sentiment, and Quality.
Click here to see LWAY’s rating for Momentum as well. LWAY is ranked #4 in the same industry.
THRN shares were trading at $6.40 per share on Thursday afternoon, down $0.44 (-6.43%). Year-to-date, THRN has gained 3.06%, versus a -12.84% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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