It's often feast or famine for S&P 500 investors. And this year, that's literally true.
Investors who poured into companies that sell food or beverages, like Celsius Holdings, Lamb Weston and Coca-Cola, are up more than $72 billion this year in market value, based on an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
Food stocks are staples that are well-positioned in a time of runaway inflation. Additionally, even if recession strikes, food demand will hold up. By owning shares of 30 companies that make the products in your pantry, the First Trust Nasdaq Food & Beverage ETF, is up 6% this year. That might not sound great, but it sure tops the S&P 500's 17% drop. Additionally more than 70% of the stocks in the most widely held food ETF are up this year.
"Staples are the stuff consumers cannot do without; discretionary items are the goods which are typically the first to be cut back when consumers start to hunker down," said Huw Roberts, head of analytics at Quant Insight. "Logically, tough economic times result in staples outperforming discretionary."
The S&P 500 Goldmine In Your Pantry
Food and beverage stocks are turning into a valuable shelter from the S&P 500. Even an orphanage is turning its holdings in a staples stock into a fortune.
And it's easy to see why. Analysts think the 30 companies in the First Trust Nasdaq Food & Beverage fund collectively will post nearly 11% higher revenue this year of $619.1 billion. That slightly edges out the S&P 500's expected 10.5% revenue growth this year, says FactSet. And it exceeds the 8% revenue growth seen coming this year from the information technology sectors.
But more important than the size of the growth, is the certainty of it. Analysts last month only cut their fourth-quarter earnings forecasts for the consumer staples industry by 3.9%. They've slashed forecasts for overall S&P 500 profit by 5.6% and by more than 12.2% for consumer discretionary companies.
Top Performing Food Stocks
If you're digging in your portfolio for top-performing food stocks, don't forget shares of Celsius Holdings. Shares of the maker of energy drinks, enjoying a remarkable turnaround, are up more than 53% this year. That makes them the top performing stock in the First Trust Nasdaq Food & Beverage ETF.
The rally is impressive: Adding more than $3 billion in market value in just a year. And it's persistent, too. Shares are up more than 2,100% in just five years. Don't discount the rally as just speculation, either. Analysts think Celsius' revenue this year will more than double to $651 million, thanks in part to a deal with PepsiCo.
Delicious Food Gains
Another big winner is frozen potato king Lamb Weston. Just this year, shares are up more than 36%. It, too, added $3.1 billion in market value to investors' portfolios. It's growing solidly as well, with revenue seen rising more than 12% to nearly $4.4 billion.
S&P 500 investors are also backing up the truck for Coca-Cola. With shares up more than 7% this year, Warren Buffett's beloved beverage giant isn't the biggest winner on a percentage-basis. But given its size, it's added more than $18 billion alone to portfolios. That's more than any other stock in the food ETF.
It's unclear if food stocks will still contribute such a big slice of gains next year. But if there's a recession next year, investors will likely maintain their appetite for food stocks' stability.
Top Food And Drink Stocks
Top-performers this year in the First Trust Nasdaq Food & Beverage ETF
| Company | Identifier | YTD % ch. |
|---|---|---|
| Celsius Holdings | 53.2% | |
| Lamb Weston Holdings | 36.0% | |
| Archer-Daniels-Midland | 34.3% | |
| Corteva | 34.3% | |
| General Mills | 26.7% | |
| Hostess Brands | 22.1% | |
| Campbell Soup | 21.7% | |
| Hershey | 19.7% | |
| Molson Coors Beverage | 14.5% | |
| Kellogg | 13.3% |
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
