After a long Thanksgiving break full of leftover turkey and pumpkin pie, the last thing on many investors’ minds right now is food. But the fact is that amid weak consumer spending and stock market volatility, consumer staples stocks such as food companies are in favor with many conservative traders. Add in the fact that many of these picks also offer decent dividends and you can see the appeal.
However, it’s worth noting that just because macroeconomic trends seem to favor consumer staples companies right now, not every food manufacturer is doing well. In fact, a number of food stocks are downright spoiled when it comes to investment potential.
Here are four particularly unappetizing food stocks:
Kellogg
The Kellogg Company (NYSE: K) is famous for its ready-to-eat cereals and convenience foods. While the stock may be a household name, holding Kellogg stock is no longer a smart option. Year-to-date, K stock has declined -7.6%, compared to gains of +5.8% and +5.5% for the S&P 500 and Dow Jones, respectively. Clearly, experts are not thrilled with Kellogg’s stock either, as they have projected earnings of just $0.51 this quarter after the company posted earnings of $0.90 last quarter. November has been another bleak month for Kellogg, as the stock dropped -2.2%. Priced at $49.18, K is an overweight stock that should be dumped.
Archer Daniels Midland
Archer Daniels Midland Co. (NYSE: ADM) is involved with procuring, transporting, storing, processing and merchandising agricultural products and commodities. Since January, this food stock has dropped -7.4%. After a short rally in September, this stock has is down -13% since the start of November. Additionally, ADM missed its last earnings estimate by -28%. Archer Daniels currently trades at $28.96 with a 52-week range of $24.22 to $34.03. If you haven’t done so already, sell this underperforming stock.
Unilever
Unilever (NYSE: UL) is a supplier of consumer goods, and some of its biggest brand names in the food industry are Knorr, Lipton and Hellman’s. Year-to-date, Unilever stock has slid -12.3%, while the broader markets have posted moderate gains. November has been a bad month for UL stock as well, as it has dropped -3.6% since Nov. 1. Likewise, in its last income statement, UL reported missing earnings estimates by -14.5%. UL is just above its 52-week low of $25.74, with a stock price of $27.97.
Campbell Soup
People may turn to soup when the weather turns colder, but Campbell Soup (NYSE: CPB) stock should not be in your possession this holiday season. Year-to-date, the stock has been stagnant, with a small gain of -.4%. However, Cambell’s stock has tanked since November, and is down -6.4% over the past 30 days. Experts have scaled back on their earnings estimates for CPB, projecting EPS of $0.72 this quarter after the food company posted EPS of $0.82 last quarter. Trading at $33.95, CPB is less than $2 above its 52-week low.
As of this writing, Louis Navellier did not own a position in any of the stocks named here.
