As investors shift their focus from last year’s hot, recovering tech stocks (the Magnificent Seven) to some of the well-managed firms in the less-appreciated sectors of the market, we could see a subtle shifting of the tides. Indeed, consumer-packaged food/beverage stocks — like POST, MDLZ, and CELH, all of which are Strong-Buy-rated stocks — tend to fare well, not only in times of recession but also in times of subtle economic prosperity.
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Therefore, in this piece, we’ll use TipRanks’ Comparison Tool to have a look at three impressive consumer-packaged food stocks that Wall Street thinks have what it takes to deliver solid results in 2024.
Mondelez (NASDAQ:MDLZ)
Mondelez is the confectionary kingpin that was quick to recover from the GLP-1 (weight loss drugs) sell-off encountered just a few months ago. Shares are up almost 20% from their October 2023 lows, which is pretty incredible for a low-tech firm in the consumer-packaged goods scene. Moving ahead, the Oreo maker has the means to jolt growth via various endeavors, including driving operational efficiencies. Nevertheless, even with promising earnings drivers, I’m taking a neutral stance on the name.
Despite Mondelez’s many growth levers and solid management team, one can’t help but wonder what the GLP-1 headwind could do to the comfort food firms. The swift recovery suggests GLP-1 drugs (like Ozempic) aren’t much to worry about. Though I view the GLP-1 sell-off as overdone, given recent shortages, what happens if such drugs become more widely available over the coming years?
Only time will tell, but the threat of GLP-1 drugs is not yet over. It’s an overhang that investors should keep tabs on through 2024 and 2025. We don’t know the true impact of weight-loss drugs, but there’s a chance that demand for comfort foods could really begin to take a hit in 2025 as GLP-1 shortages resolve.
What is the Price Target of MDLZ Stock?
Mondelez stock is a Strong Buy, according to analysts, with 19 Buys and one Hold assigned in the past three months. The average MDLZ stock price target of $80.89 implies 11.04% upside potential.
Post Holdings (NYSE:POST)
Post Holdings is a rather snore-worthy consumer-packaged-goods company that’s gone flat over the past year (down around 2%). Despite the lack of momentum, investors shouldn’t ignore the company’s dominance of the middle aisle of the grocery store and its gradual shift diversification from cereals to other product categories (think pet food and healthier packaged goods). Indeed, Post has robust brands that now span beyond the cereal aisle.
Over the years, Post has added to its brand portfolio via acquisitions. Looking ahead, I expect the firm to keep making deals at the pace of one to three per year. Given Post’s knack for growing via acquisitions, I can’t help but be bullish on the stock going into 2024.
Since the pandemic began, Post has been on quite the acquisition spree, gobbling up the Peter Pan peanut butter and Egg Beaters brands, just to name a few. Though the pace of deals has since slowed, one can’t help but think another brand deal could be on the horizon as the firm improves its cash position.
Kicking off the new year, Mizuho Securities’ John Baumgartner gave POST stock a Buy rating and a $110.00 price target (18.4% upside from here). He’s a fan of the firm’s management team and their ability to “maximize optionality of assets and capital.” I couldn’t agree more with Mr. Baumgartner.
A huge reason why Post’s acquisition strategy has been a success is because of management’s abilities. Had it been any other firm making such deals, I’m not so sure M&A would have been an effective way to move the needle higher on the share price.
At 19.3 times trailing price-to-earnings, value investors may wish to add some POST stock to their cereal bowls while they’re still trading at a slight discount to the packaged food industry average of 20.2 times.
What is the Price Target of POST Stock?
Post stock is a Strong Buy, according to analysts, with six Buys and two Holds assigned in the past three months. The average POST stock price target of $104.63 implies 12.6% upside potential.
Celsius Holdings (NASDAQ:CELH)
Celsius Holdings is behind the hyped (and energized) drink sensation that’s taken the energy beverage world by storm. Though Celsius isn’t a tech-leveraging disruptor in AI, it’s found a way to disrupt the drink scene with some clever moves, including partnering up with an industry heavyweight in Pepsi (NASDAQ:PEP).
Teaming up with the major player to leverage its expertise (and infrastructure) has really paid off. At writing, CELH stock is up around 60% over the past year alone. Up ahead, I expect more gains to come as Wall Street continues to stand by the hot and disruptive emerging brand.
As Celsius’ brand continues to build affinity among younger consumers, count me as unsurprised if the firm ends up being acquired by a juggernaut worth $100 billion or more. Immediately, Pepsi comes to mind as a candidate to buy Celsius. It is a trusted partner, after all. Also, Pepsi really needs a caffeine jolt to wake up its stock. In any case, I view Celsius as a sought-after gem on its own or in the hands of an industry giant.
Celsius has been steadily gaining both market share and brand affinity at an enviable rate in recent quarters. And going into 2024, I don’t expect much to derail such trends, even if a recession takes a bite out of the American economy.
What is the Price Target of CELH Stock?
Celsius stock is a Strong Buy, according to analysts, with 12 Buys and two Holds assigned in the past three months. The average CELH stock price target of $72.25 implies 20.5% upside potential.
The Takeaway
Food stocks could prove to be great bets in 2024, especially if a recession finally shows itself, punishing more cyclical areas of the market. Of the trio in this piece, analysts view CELH stock as having the most room to gain.
