Food stocks to buck a downtrend market

In fact, some food stocks are already helping investors buck the downtrend in the market. Here’s a look at two of them.

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Cal-Maine Foods

Cal-Maine Foods (NASDAQ:CALM) is the largest producer and distributor of shell eggs in the U.S. The company has been around since 1957 and sells most of its shell eggs in the southwestern, southeastern, mid-western and mid-Atlantic regions of the U.S.

The ongoing market downturn has hurt numerous stocks, but Cal-Maine Foods investors aren’t complaining. Shares surged 35% in the last 12 months, in stark contrast to the S&P 500’s double-digit decline over the same period.

As you’d expect, higher egg prices benefit the egg producer. In the fiscal quarter that ended Nov. 28, 2022, Cal-Maine Foods generated record net sales of $801.7 million, marking a 110% increase year over year.

The company also earned a record quarterly net income of $198.6 million, or $4.07 per diluted common share.

“The significantly higher selling prices, our enduring focus on cost control, and our ability to adapt to inflationary market pressures led to improved profitability overall with a gross profit margin of 39.6% for the second quarter of fiscal 2023, another record for Cal-Maine Foods,” said the company’s chief financial officer Max Bowman in a press release.

If egg prices remain elevated, this entrenched egg producer will likely continue to prosper.

Post Holdings

Post Holdings (NYSE:POST) is a consumer packaged goods holding company. While the current company came into existence through a spin-off from Ralcorp Holdings in 2012, its history can be traced all the way back to 1895, when C.W. Post created a breakfast cereal named “Post Toasties.”

Today, the company has a portfolio of businesses, including Post Consumer Brands, Weetabix, Michael Foods and Bob Evans Farms.

Business has been booming. In Post Holdings’ fiscal 2022, which ended Sept. 30, net sales totaled $5.85 billion, marking a 17.5% increase from fiscal 2021.

The biggest growth driver was the company’s Foodservice segment, which includes primarily egg and potato products. Net sales from the segment rose $29.7%, or $479.4 million for the fiscal year.

The bottom line, though, turned out to be even more impressive. The company’s net earnings from continuing operations came in at $735.0 million for fiscal 2022 — a whopping 600.7% increase from the $104.9 million generated in the prior year.

Just like Cal-Maine Foods, Post Holdings is defying the stock market sell-off: shares have climbed 25% over the past 12 months.

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