If you’re wondering if there are any worthwhile food stocks to own currently, look no further. Food stocks saw collective investor enthusiasm fall off a cliff in recent years. The plant-based meat products largely proved a bust as consumers made their preference for “real meat” known. But that doesn’t mean we need to throw the baby out with the soy-flavored bathwater.
Beyond (pun intended) the misguided push for meat alternatives, a real and organic (also pun intended) movement is actively springing up around the future of food. Seed oil rejection, farm-to-table emphases, sustainable farming practices, and more are increasingly anchoring consumer food buying habits. Luckily, for investors and discerning shoppers alike, a handful of food stocks are stepping up to the plate to answer the collective question, “Where’s the beef?”
Balchem Corp (BCPC)
Balchem Corp (NASDAQ:BCPC) is a chemical and gas manufacturer that may not seem a likely candidate for top food stocks. However, the company emphasizes farm animal nutrition, from dairy cow mineral supplementation to Vitamin C for chickens. While Balchem’s operational model swings farther toward factory farming than it does an organic hippy operation, the company’s helping those industrial operations ensure health and vitality for their eventual meat products, which, in turn, reduces reliance on nastier chemicals, hormones, and antibiotics.
Balchem’s industrial-sized operation and diverse product offerings also make it a top food stock for a stabler portfolio than some more speculative food stocks. The company’s beta is 0.85, meaning it is less volatile than the wider market as a result of its contributions to consumer staple industries. Better yet, despite less volatility, the stock returned roughly the same as the S&P 500 over the past year – both right around 22%, with BCPC generating returns with fewer dips and drawdowns.
Local Bounti Corp (LOCL)
Local Bounti Corp (NYSE:LOCL) dubs itself “The Farm of the Future,” thus ensuring its place on a list of food stocks to invest in the future of foods. LOCL is a greenhouse-based agricultural operation that lets customers enjoy out-of-season produce throughout the year. Better yet, the company contributes mightily to shifting sustainability demands, as its growing operations use 90% less water and land than traditional farming while emphasizing a “local first” expansion model.
To be honest, the company’s current position is better-suited to the ZIRP era. The company is still in its early stages. Although it is growing, this growth comes with expenses that sales have not yet balanced. For example, though the company’s sales ticked up in the most recent quarter, it still posted a $24 million net loss (though improved from the prior year). Still, the company weathered the economic storm thus far where many speculative food stocks faltered and failed, i.e., inherent losers like Tattooed Chef (OTCMKTS:TTCFQ). If LOCL can keep treading water without going under, the company’s sustainable food stock position has a bright future.
Steakholder Foods Ltd. (STKH)
Steakholder Foods Ltd. (NASDAQ:STKH) takes the paradigm that Beyond Meat (NASDAQ:BYND) espoused and turns it into something more digestible to consumer appeal. Instead of soy slop, STKH uses next-gen 3D printing technology to turn loose cells into near-indistinguishable steak cuts and fish fillets. The company’s products are sometimes called “clean meat” because (unlike industrial farming) there are far fewer environmental impacts to consider and different (but not less, necessarily) ethical concerns.
Like LOCL, STKH trades well within penny stock territory. In STKH’s case, R&D is increasingly expensive in a high-rate regime, stymying rapid progress and bringing shares well below past highs. Not quite ready for commercialization either, the company’s recent losses and a dwindling cash balance pose a serious risk to its future. Still, the company’s proprietary tech is unmatched within the current business landscape. That moat increases the odds that – if it goes under operationally – a competitor or large food company could step in to save it.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
