The Future of Food and 3 Stocks Innovating the Food Industry

The future of the food sector looks bright. Investors could buy food stocks such as Sysco (SYY), WH Group(WHGLY), or Seaboard (SEB) that are fundamentally strong. Continue reading.

With the changing tastes and needs of consumers, the future of food looks very exciting. Food companies are developing new innovations in order to capitalize on consumer demand for new trends.

If you want to invest in a food stock that has a solid future, consider Sysco Corporation (SYY), WH Group Limited Limited (WHGLY) and Seaboard Corporation SEB.

Let's first discuss the state of the food industry before we dive deeper into these stocks.

The CPI rose by 0.1% in March and 5% annually, showing signs of continued inflation ease. The food industry will benefit from this as input costs are cooling and demand is returning.

Food companies use innovation to create and standardize new products, services, and processes. Food companies are always developing new products to meet the changing needs of consumers and their ever-changing preferences. Food companies also strive to provide healthier, more sustainable products.

Investors are interested in innovations such as plant-based meat substitutes, sustainable packaging and cultured meat. They also like dairy-identical products.

Many companies have increased their investments in research and development to launch new plant-based and alternative protein products. Many companies are also working to reduce the environmental impact of agriculture.

Statista projects that the revenue on the food market will reach $9.43 trillion by 2023, and continue to grow at a 6.2% CAGR until 2027. Innovation will drive the future of food. The global market for plant-based meat is expected to grow by 24.9% CAGR to reach $24,80 billion in 2030.

Investors could gain from the fundamentally strong food stocks WHGLY, SYY and SEB.

Let's talk about the fundamentals for the stocks featured.

Sysco Corporation (SYY)

SYY is a global company that markets and distributes food products and other related items, primarily for the foodservice and food-away from home industries. It is divided into U.S. Foodservice Operations and International Foodservice Operations. SYGMA and Other are its other segments.

SYY's non-GAAP forward P/E is 18.79x, which is 2.2% less than the industry average of 19.22x. The 0.64x EV/Sales ratio is 63% less than the industry average of 1.73x. Its 0.50x price/sales ratio is also 57.5% less than the industry average of 1.17x.

SYY’s non-GAAP Operating Income for the Third Quarter ended April 1, 2020 increased by 27.8% over the previous year to $735.50 Million. Non-GAAP net income for the company increased by 26.9% over the past year to $460.50 millions. The company's adjusted EBITDA grew 19% to $899.70 millions. The non-GAAP earnings per share (EPS) increased by 26.8% to $0.90.

Analysts predict that SYY's earnings per share and revenue will increase by 16.1% and 5% respectively, over the previous year, for the quarter ending June 30, 2023. These figures are $1.33 billion and $19.91 Billion, respectively. The stock is down 1.5% for the year to date, closing at $75.32 in the last trading session.

SYY’s POWR Ratings reflect its strong fundamentals. Our proprietary rating system gives the stock an overall rating A. This is equivalent to a Strong Purchase. The POWR ratings assess stocks based on 118 factors, each of which has its own weighting.

It is ranked 5th out of 79 stocks in the B-rated Food Makers sector. It is rated B for Growth, Value Momentum and Stability. Click here to see SYY's additional ratings for Sentiment & Quality.

WHGLY is an investment holding company headquartered in Kowloon in Hong Kong. It engages in production, wholesale and retail sales of meat products throughout China, Mexico, the United States and Europe. The company is divided into three segments: Packaged Meats (Pork), Other Products, and Other.

WHGLY has a forward EV/Sales ratio of 0.38x, which is 77.9% less than the industry average of 1.73x. The 4.10x forward EV/EBITDA of WHGLY is 66.1% less than the industry average (12.09x). Its 0.28x price/sales ratio is 76.3% less than the industry average of 1.17x.

WHGLY's revenues for the first quarter ending March 31, 2023 increased by 2.9% over the previous year to $6.74 Billion. The profit that was attributable by the owners of WHGLY came to $174 million. Total assets of the company were $20.37 billion compared to $19.86 for the fiscal year ending December 31, 2022. Its EPS was $1.36.

WHGLY is expecting its revenue to grow by 1.6% to $28.60 Billion in fiscal 2023. The stock gained 7.9% in the past six-months to close at $11.03 during the last trading session.

WGHLY's POWR Ratings reflect its positive outlook. The stock's overall rating is A, which in our proprietary system equates to Strong Buy.

It is ranked third in the same industry. It is rated A for Value, and B for Growth and stability. WHGLY also received grades for Sentiment and Quality. All WHGLY ratings are available here.

Seaboard Corporation SEB

Seaboard Corporation is a global agricultural and transportation company. Seaboard Corporation operates in six segments: Pork, Commodity Trading and Milling, Marine, Sugar and Alcohol, Power, and Turkey.

SEB's trailing-12 month EV/Sales is 75 percent lower than the industry average of 1.78x. The 5.62x trailing-12 month EV/EBITDA of SEB is 60.3% less than the industry average 14.15x. Its 0.39x 12-month trailing Price/Sales ratio is 67.7% less than the industry average of 1.22x.

SEB's net sales totaled $2.50 billion for the quarter ending April 1, 2023. Other sales increased 188.9% over the past year to $52 millions. Total other income for the company was $50 million compared to $27 million loss in the previous quarter. Total liabilities decreased by 3.5%, to $2.79 Billion. This compares to $2.89 Billion for the fiscal year ending December 31, 2022.

The stock closed the last trading day at $3,823.27, a 1.3% gain over the previous six months.

SEB's solid prospects are reflected in its POWR Ratings. Overall, it has a rating of B which is equivalent to a buy. It is ranked #7 within the Food Makers sector.

It is rated A for Stability, B for Value, Growth and Sentiment. You can click here to view the other SEB ratings for Momentum and Quality.

SYY shares traded at $75.79 on Thursday morning. This was up $0.47 (+0.62%). SYY shares have gained 0.41% year-to-date compared to a rise of 6.76% in the benchmark S&P 500 Index during the same time period.

Malaika Alphonsus is the author

Malaika's love of writing and her interest in the financial markets led to her pursuing a career as an investment researcher. She has a degree from the University of Economics and Psychology and hopes to help investors make informed decisions about their investments.