Key Points
Conagra is expected to experience bottom line growth as cost pressures ease.
Kraft Heinz is trading at 13 times earnings, well below the industry average of 22 times.
J.M. Smucker has a price-to-earnings (P/E) ratio of only 12x based on the last four quarters of earnings.
With the holiday season approaching, it’s a time to be thankful for family, friends, and good health. Amid the festive celebrations, it’s important to appreciate undervalued stocks as well.
The stock market has seen some significant gains, but not every stock has been overvalued. In fact, about one in every ten S&P 500 stocks is trading at less than 10x earnings. With inflation potentially subsiding and interest rates expected to follow suit, value stocks could have a strong year in 2024. This shift could lead to increased interest in the more predictable and less volatile value style, particularly in the food and beverage sector. While some investors may find these companies less exciting, their consistent demand and undervalued status make them attractive investments.
Conagra Brands, Inc. (NYSE: CAG) is currently trading at around 12x trailing earnings and 10x next year’s earnings. Despite a 27% drop in share price this year due to rising costs and lower sales volumes, the company is expected to see a return to bottom line growth in the near future as cost pressures diminish.
Kraft Heinz Co. (NASDAQ: KHC) is trading at 13x earnings, well below the industry average of 22x, and offers a dependable 4.7% dividend. Although the company has faced challenges such as higher expenses and increased competition, analysts expect its strategic initiatives to lead to modest profit growth next year, making it an attractive value investment.
The J.M. Smucker Company (NYSE: SJM) has a P/E ratio of only 12x based on the last four quarters of earnings. The recent acquisition of Hostess Brands has raised some concerns, but the company’s move to operate within a more streamlined framework is expected to result in improved profitability, offering potential returns for value investors.
As the market continues to evolve, these overlooked food stocks present promising opportunities for investors who appreciate undervalued assets.
