Despite macroeconomic uncertainties, the food industry is expected to thrive. So, quality food maker stocks Ajinomoto Co., Inc. (AJINY), Tate & Lyle plc (TATYY), and John B. Sanfilippo & Son, Inc. (JBSS) could be wise additions to your portfolio now.
The food sector is developing due to advanced procedures, higher dining-out spending, and a growing desire for fast food consumption. According to Statista, food market revenue will reach $9.36 trillion in 2023 and grow at a 6.7% CAGR until 2028.
Food manufacturers are investing in automation to meet consumer demands due to the rising demand for processed items and changing lifestyles. Rapid technological advancement, changing consumer preferences, and regulatory agencies have also boosted the use of automated technologies in the food business. The food automation market is projected to reach a revised size of $33.45 billion by 2028, growing at a CAGR of 7.4%.
Food makers are increasingly embracing automation technologies such as robotics, the Internet of Things (IoT), data analytics, digital twins, and artificial intelligence, which could help the industry grow.
In addition, food stocks are known to be recession proofs making them safe haven investments.
Let’s delve deeper into the fundamentals of the featured stocks.
Ajinomoto Co., Inc. (AJINY)
Headquartered in Tokyo, Japan, AJINY engages in seasonings and foods, frozen foods, and healthcare and other businesses in Japan and internationally. The company operates through three segments: Seasonings and Foods; Frozen Foods; and Healthcare and Others.
AJINY’s trailing-12-month EBIT margin of 16.24% is 63.7% higher than the industry average of 9.92%. Its trailing-12-month net income margin of 6.92% is 119.4% higher than the industry average of 3.16%.
AJINY’s sales for the year ended March 31, 2023, increased 7.3% year-over-year to ¥1.15 trillion ($7.96 billion). Its gross profit increased 4.8% from the year-ago value to ¥425.90 billion ($2.95 million). In addition, the company’s profit and EPS increased 21% and 28.7% year-over-year to ¥80.23 billion ($555.38 million) and ¥139.42, respectively.
The consensus revenue estimate of $10.48 billion for the year ending March 2024 represents a 3.7% increase year-over-year. AJINY’s shares have gained 62.8% over the past year to close the last trading session at $39.72.
AJINY’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
AJINY has an A grade for Stability and a B for Growth and Quality. Within the Food Makers industry, it is ranked #7 out of 81 stocks. Click here for the additional POWR Ratings for Value, Momentum, and Sentiment for AJINY.
Tate & Lyle plc (TATYY)
Headquartered in London, the United Kingdom, TATYY together with its subsidiaries, provides ingredients and solutions to the food, beverage, and other industries in the United States, the United Kingdom, other European countries, and internationally. It operates through three segments: Food & Beverage Solutions; Sucralose; and Primary Products.
TATYY’s forward EV/EBITDA multiple of 10.45 is 23.3% lower than the industry average of 13.40. Its forward EV/EBIT multiple of 11.79 is 24.3% lower than the industry average of 15.57.
TATYY’s trailing-12-month levered FCF margin and net income margins of 79.45% and 10.85% are significantly higher than the industry averages of 2.98% and 3.16%, respectively.
For the year ended March 31, 2023, TATYY’s revenue increased 27.3% year-over-year to £1.75 billion ($2.22 billion). Also, its operating profit increased 192.5% from the year-ago value to £196 million ($248.70 million). The company’s EPS came in at £30.8p, representing an increase of 460% from the prior-year period.
Street expects TATYY’s revenue to increase 6.7% year-over-year to $2.30 billion for the year ending March 2024. Over the past nine months, the stock has gained 21.1% to close the last trading session at $36.79.
It’s no surprise that TATYY has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B grade for Growth, Stability, Sentiment and Quality. It is ranked #5 in the same industry.
Beyond what is stated above, we’ve also rated TATYY for Value, and Momentum. Get all TATYY ratings here.
John B. Sanfilippo & Son, Inc. (JBSS)
JBSS through its subsidiary, JBSS Ventures, LLC, processes and distributes tree nuts and peanuts in the United States.
JBSS’ trailing-12-month EV/EBIT multiple of 15.51 is 15.5% lower than the industry average of 18.36. Its trailing-12-month EV/Sales multiple of 1.37 is 19.7% lower than the industry average of 1.70.
JBSS’ trailing-12-month ROTC of 16.77% is 166.5% higher than the industry average of 6.29%. Its trailing-12-month ROTA of 14.74% is 259.9% higher than the industry average of 4.10%.
In the third quarter that ended March 30, 2023, JBSS’ net sales increased 9.1% year-over-year to $238.54 million. Its income from operations came in at $21.82 million, up 25.2% year-over-year. Also, its net income and EPS increased 32.5% and 32.4% year-over-year to $15.73 million and $1.35, respectively.
The stock has gained 69.3% over the past year to close the last trading session at $117.27.
JBSS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It is ranked #8 in the same industry. It has a B for Growth and Quality. To see additional JBSS’ ratings for Value, Stability, Sentiment and Momentum, click here.
What To Do Next?
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AJINY shares were trading at $39.88 per share on Monday morning, up $0.16 (+0.40%). Year-to-date, AJINY has gained 30.20%, versus a 16.80% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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