According to Peter Lynch, an American investor, mutual fund manager and the author of several books on trading, novice traders are better off finding companies that they are actually interested in or using on a daily basis to invest in. This makes sense: this way a trader would be more inclined to follow the company’s performance, read the news and generally keep an eye on the field. While some fields like technology or finance may require more specific knowledge, the food industry is more straightforward. It is quite stable and reliable, too: one may not purchase the next iPhone, but everybody needs to eat. Food companies are those we interact with the most: when we buy groceries, go out to eat or order delivery.
Food industry overview
Just as many other industries, the food industry got affected by COVID-19. People’s habits changed, however, there is no one general trend that all people follow. Some people, while staying at home, turned to delivery services and started ordering more pre-cooked food, while others discovered a newfound interest in cooking. With all that said, the consumer fundamentals usually outperform other businesses during economic declines.
When trading CFDs with companies of the food industry, one needs to understand which role the company plays in the food chain and how it can defend itself from competitors in the long term perspective. The company may be engaged in food farming, processing, distributing, it may be a farming machinery producer, a grocery store or a restaurant. All being involved in the same field, the companies will have different areas of concern and different struggles. If the company specializes in farming, the reasons for its prosperity or failure will be different from a company that specializes in online grocery shopping.
Let’s have a closer look at 5 stocks of food companies that can be found on the IQ Option platform.
The Coca-Cola Company is the world’s largest manufacturer and supplier of concentrates, syrups and soft drinks. It is one of the most internationally recognizable brands in the world: it is hard to find someone who has never heard of the Coca-Cola drink and its cultural impact is undeniable. The drink ranks number #1 best selling drink in most countries and the wide variety of other sodas with alternative flavors fill the market. The company doesn’t stop growing and consistently ranks high based on performance and revenue: this year, Coca-Cola was included in the Fortune 500 list of America’s largest companies.
Though the company does face criticism for its plastic production and waste, it continues to expand and it’s hard to imagine that the popularity of this sugary drink will drop anytime soon. Currently the stock is traded at $49.4 per share.
Another food company specializing in beverages that made it to the Fortune 500 list is Starbucks. The coffeehouse chain serves hot and cold coffee drinks, including the Pumpkin Spice Latte – their most popular seasonal drink, as well as tea, pastries, snacks, and hot sandwiches. Starbucks is also widely known for introducing a drinkware line that includes mugs and tumblers – many of them are specifically designed for certain locations, which makes them an attractive tourist souvenir.
As of early 2020, Starbucks controlled around 40% of the US coffee market, however, the company suffered a sales decrease during the lockdown due to pandemic. The shares reached their low at around $49.8 in March and started regaining momentum since, with the current price at $83.9 per share.
This one will definitely interest vegans as Beyond Meat, for over 10 years now, specializes in meatless proteins. It makes plant-based meat that imitates the feel and taste of real chicken and beef. Their burgers are made from rice, pea and bean proteins and have the qualities of a regular burger – the consistency and even the “bleeding”, which is achieved by using red beet juice. Even if you choose meat over plant-based substitutes, it is hard to argue with the advances in food technology that this company achieved.
Beyond Meat tries to be as sustainable as possible and makes efforts in replacing plastic sausage trays with compostable alternatives. Today, the company’s shares continue to show positive tendencies and are currently traded at $148.7 per share.
Being one of the largest producers of condiments, Heinz is definitely worth considering when picking food industry assets to trade. Heinz is mostly known for their ketchups and other sauces, widely used by individuals and restaurants. However, their product line also includes canned and frozen goods. The company is estimated to control around 60% of the ketchups market in the USA and ranks among the most popular condiment brands in other countries. Though the asset has been showing a steady decrease in the past several years, in 2020 the stock managed to grow and is currently traded at $29.6.
The last, but definitely not the least important in today’s list of food companies is McDonald’s. Talking about McDonald’s is almost unnecessary: everyone knows the delicious hamburgers, cheeseburgers and french fries, the smell of which makes your mouth water. McDonald’s is the world’s largest restaurant chain by revenue with outlets in over 100 countries.
Though the future is always unknown, the company’s 80-year history makes their success undoubtable. As follows from a 5-year chart, McDonald’s shows stable growth with a slight hiccup in March of 2020. Since then, the stock almost doubled in price and it is currently traded at $216.7.
Do you trade any food companies? Let us know your opinion about them in the comments below!
*information regarding past performance is not a reliable indicator of future performance.