Stifel's Top Food Stocks

In a new report, analysts at Stifel took a look at food stocks and gave their updated outlook for the group  Here’s a breakdown of what they had to say.

Neutral outlook
Overall, analysts have a neutral outlook for food stocks based on current premium valuations and “average” growth forecasts. Food stocks are currently priced at a 24 percent premium to the S&P 500. Analysts believe that the announcement of the Kraft Foods Group Inc KRFT/Heinz merger in Q1 helped support premium valuations in the space.

Analysts are predicting 3 percent earnings growth for food stocks in 2015. Low fuel prices and international growth will likely to continue to help large American companies. Analysts are calling for a 50 bps increase in gross margins for food stocks this year as well.

In-line Q1
Analysts don’t see any big surprises from the group this earnings season. Stifel’s earnings estimates for The Hershey Co HSY, Dean Foods Co DF, Kellogg Co K, Treehouse Foods Inc THS, Post Holdings Inc POST and Kraft are “a penny or so off from consensus.”
Analysts are calling for a 2 percent year-over-year (y/y) earnings per share (EPS) decline for large-cap food companies in Q1. They predict a 17 percent Y/Y decline in The J.M. Smucker Co’s SJM earnings and a 14 percent Y/Y drop in Campbell Soup Co’s CPB Q1 EPS.

Top picks
Analysts advise investors to “remain selective in their food exposure.” Stifel’s top stock picks are The WhiteWave Foods Co WWAV, General Mills Inc GIS, Treehouse, and Kraft.

Posted In: Analyst ColorPreviewsAnalyst RatingsTrading Ideas

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.