Friday, November 13, 2020 8:10:28 AM
7:29 am ET November 12, 2020 (Dow Jones) Print
By Teresa Rivas
With 2020 drawing to a close, people are preparing for a holiday season unlike any other. Expect more people to continue to cook and eat at home, through the end of the year, says Piper Sandler, and packaged-food and quick-service restaurant stocks should benefit.
Analyst Nicole Miller Regan takes a look at food stocks going into the holidays, and writes that, much like the rest of the year, consumers look poised to continue working and eat at home. Doorstep delivery and plant-based meat are other trends that she expects will remain solid through the end of the year, as well as into 2021.
Regan writes that more than 60% of consumers her firm surveyed said they expect to continue to cook more meals at home, a positive for packaged-food stocks. She highlights General Mills (GIS) and Kraft Heinz (KHC). The former is benefiting from strong sales growth and a strengthened balance sheet, while the latter sports an attractive valuation and a growing top line. Both companies could also engage in accretive M&A, she writes.
In addition, she says Mondelez International (MDLZ) and Beyond Meat (BYND) can "win in any environment." Mondelez looks poised to deliver a strong 2021, she writes, while rising demand for plant-based meat looks sustainable.
Of course, while people may be cooking more at home, they'll still want to treat themselves sometimes, and that should disproportionately favor fast-food style restaurants over high-end and experiential dining. Quick-service restaurants are not only cheaper, but they are more focused on suburban locations and more likely to have a drive-through.
Regan likes Chipotle Mexican Grill (CMG), as it's moving "from recovery to growth mode and benefits from growing digital sales," and Wendy's (WEN) for its low-price, high-frequency model and a "non-replicable experience."
Write to Teresa Rivas at teresa.rivas@barrons.com
(END) Dow Jones Newswire
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