Now that we’re into the 3rd quarter, we’re stating to spot the pundits dependable disconnected connected what the Q2 economical information volition amusement – and immoderate of them are openly saying that 2nd 4th GDP volition grounds a contraction. Coming connected the heels of the 1.6% contraction successful Q1, this volition enactment the US successful a method recession. Along with rising ostentation and the Fed’s crook to higher rates and monetary tightening, this adds up a darkening economical picture.
But Jim Cramer, the well-known big of CNBC’s ‘Mad Money’ program, is "not wholly convinced" that a recession is successful the offing. He believes the system retains capable spot to dodge that slug – but helium is not afloat wiling to disregard the possibility. And so, Cramer has been looking for beardown antiaircraft stocks to enactment up a portfolio’s presumption for the near- to mid-term.
His solution: “Food stocks tin go recession-proof safe-havens. But you person to beryllium selective, which means sticking with the winners that we cognize are doing well... astir everybody seems convinced that we’re headed into a recession, and portion I’m not wholly convinced, that creates a overmuch amended backdrop for the ‘Steady Eddie’ packaged nutrient stocks.”
With this successful mind, we’ve utilized the TipRanks database to pinpoint 2 stocks successful the packaged nutrient sector. Each is simply a Strong Buy, according to the expert community, and has a sizeable upside imaginable for the coming year. Let's instrumentality a person look.
The Hain Celestial Group (HAIN)
First up is Hain Celestial, a large subordinate successful the earthy foods and botanical idiosyncratic attraction products niches. Hain owns and markets a wide scope of beverages and foods, including the Celestial Seasonings herbal teas, the fashionable Mexican effect soda marque Joya, and Empire Kosher poultry. In its idiosyncratic attraction line, the institution boasts specified brands arsenic Jason, Alba, and Avalon Organics. The company’s largest marketplace is North America, wherever income grew much than 13% successful the archetypal portion of this year.
For Q3 of fiscal 2022, the institution reported $502.9 cardinal successful full nett sales. That was up a humble 2% year-over-year, but inactive the highest successful the past 5 quarters. Hain reported 33 cents per stock successful adjusted EPS for the quarter, down 25% from the year-ago fig of 44 cents.
The company’s International income were down 14% successful the quarter, to $177.2 cardinal of the full sales. Hain has been moving, successful caller quarters, to divest itself of lower-profit and lower-margin segments and brands, arsenic a strategy to streamline the business.
Hain reported a humble maturation successful currency assets arsenic of the extremity of fiscal Q3, with $57.8 cardinal successful liquid assets connected hand. This was a 9% summation compared to the $53 cardinal reported 1 twelvemonth earlier.
Cowen expert Brian Holland has reviewed Hain’s caller performance, and comes down connected the broadside of the bulls, writing: “The pivot from an overly analyzable holding institution to a streamlined relation has yielded stock growth, borderline improvement, and a healthier equilibrium sheet—all of which person efficaciously positioned Hain for the adjacent signifier of its improvement to a precocious maturation wellness & wellness captain."
"In our presumption existent valuation is overly punitive, astir notably successful effect to transitory factors weighing connected the company’s International segment. We deliberation our exemplary and statement appropriately seizure the nearer word headwinds, and yet judge the International concern could beryllium divested which presumably would catalyze a rerating successful the stock," the expert added.
Holland’s exemplary gives the banal an Outperform (i.e. Buy) rating, and a $34 terms target. If the people is achieved, HAIN could supply 44% returns implicit the adjacent 12 months. (To ticker Holland’s way record, click here)
The Cowen presumption connected Hain is nary outlier. This banal has picked up 8 expert reviews recently, and these see 7 Buys against conscionable 1 Hold, for a Strong Buy statement rating. The shares are priced astatine $23.58 and the $34.88 mean people implies ~48% upside successful the months ahead. (See HAIN banal forecast connected TipRanks)
Hostess Brands (TWNK)
The adjacent banal is 1 of America’s iconic snack brands, Hostess. The makers of Twinkies, HoHos, and Donettes, Hostess has provided some snacks and joyousness for much than a century. The institution has eschewed the wellness niches of the nutrient industry, and alternatively focused connected doing 1 thing, making long-shelf-life cakes and snacks that entreaty to kids. In this, Hostess has succeeded.
That occurrence tin beryllium measured objectively successful the astir caller net report, released successful May for 1Q22. Hostess saw coagulated maturation successful aggregate cardinal metrics, including full revenues, gross profits, and adjusted EPS. At the apical line, the gross of $332 cardinal was up 25% year-over-year; gross profits roseate 21% to $115 million, and adjusted EPS climbed 35% y/y, from 20 cents to 27 cents.
Management attributed the beardown maturation to respective factors, each of which bode good for the institution going forward. First was a 15% summation successful user demand, which was described arsenic ‘strong’ and ‘broad-based.’ The remainder of the gross maturation was attributed to a operation of a favorable merchandise premix and dependable merchandise pricing. While Hostess did study tiny drops successful operating and escaped currency flows for the quarter, the company’s currency and currency equivalents accrued y/y, increasing by 20% to scope $238.4 million.
Furthermore, wherever the broader markets are down this year, with the S&P 500 successful carnivore territory, TWNK shares person outperformed, gaining 5%.
Looking ahead, Truist expert Bill Chappell believes the institution is solidly positioned to stay competitory and successful, adjacent should economical conditions worsen. He writes, “As the outgo situation has worsened, TWNK is taking much pricing starting successful 2H (we enactment determination volition beryllium gross borderline lag successful 2Q), which it has seen small pushback to date. As we look ahead, we spot the imaginable for upside to the income guidance arsenic it assumes MSD% measurement maturation and much than 10% successful pricing efforts (with much rounds coming successful 2H), but judge it is omniscient to beryllium prudent successful this hard to navigate environment.”
"All in, we proceed to judge the institution has positioned itself good crossed the snacking category, and we judge the aggregate should proceed to determination higher fixed its accordant show during a hard to navigate environment," the expert summed up.
Chappell’s comments backmost up his Buy standing connected Hostess stock, portion his $30 terms people indicates imaginable for 39% maturation implicit the adjacent 12 months. (To ticker Chappell’s way record, click here)
Overall, it’s not conscionable kids who similar Hostess. Wall Street has fixed the banal a Strong Buy statement rating, which is based connected a 6 to 1 divided successful the expert reviews, favoring Buys implicit Holds. The stock terms of $21.52 and the mean terms people of $26.86 unneurotic constituent toward ~25% one-year upside. (See Hostess banal forecast connected TipRanks)
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Disclaimer: The opinions expressed successful this nonfiction are solely those of the featured analysts. The contented is intended to beryllium utilized for informational purposes only. It is precise important to bash your ain investigation earlier making immoderate investment.