Consumer stocks that deal with food products are in focus right now. Euro zone debt fears, high unemployment and a volatile stock market means investors are taking shelter in staples stocks that deal in the most basic of needs for Americans: Food.
Of course, not all food stocks are equal. You need a strong brand and a great niche for your products. Whether it’s higher quality or lower prices, food stocks need an edge to get ahead.
Here are four top food stocks to eat up amid market volatility:
Coca-Cola (NYSE:KO) not only performs well in weak economies, but accelerates profit growth when the global economy is humming along. Coca-Cola is booming in emerging markets because those countries’ predominantly younger populations enjoy the affordable luxury of Coca-Cola’s products (two to three times more expensive than local brands). In the latest quarter, strength came from emerging markets, including a 19% volume increase in India and a 7% increase in Latin America. The company increased its share repurchase program to $3 billion by the end of 2011, up from its prior goal of $2.5 billion.
Chipotle Mexican Grill (NYSE:CMG) is one of the fastest-growing fast-food restaurants in the U.S. And this year, CMG has been the best-performing restaurant stock in the S&P 500 Index to date! The company has been able to increase same-store sales consistently despite higher food costs. Chipotle can absorb short-term food price hikes unlike any other restaurant stock, and that makes it the perfect play for us in the year ahead.
Whole Foods Market (NASDAQ:WFM) is dominating the high-end supermarket business. Whole Foods offers an unparalleled selection of groceries, body care products and other household products. For 2012, analysts expect Whole Foods’ earnings growth to outpace the rest of the grocery stores industry, accelerating 15%. And WFM will keep its dominant position as it is doing an outstanding job in containing its costs, managing its inventory and ramping up performance.
Costco (NASDAQ:COST) is basically a cult for thrifty shoppers — not just in regards to electronics but to big cuts of meat and packaged foods. With retail sales picking up, I expect Costco will sell more high-end products that will pad its operating margins. For example, at my last visit to Costco, there were many filet mignon roasts available at approximately $90 apiece for holiday meals, as well as lobster tails and other expensive food items. And, COST will get a new CEO with Craig Jelinek taking the reins from Jim Sinegal. I don’t see any potential problems with the transition — or the future prospects of COST shares.