Finder's Pick for
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Since food is a necessity, investing in food stocks can sound like a lucrative venture. But it involves some risks you need to consider.
Food stocks are stocks in any company involved in the production and transportation of food from the farm to your stomach. So you can invest in stocks related to any of the following industries:
These industries keep the world food supply running and are essential to everyday life. For instance, think about how your morning coffee ended up in your cup — it all started in the ground as a coffee bean.
Farmers need water, fertilizers and other resources to grow these beans. Beans then need to be processed, transported, roasted, brewed and finally poured into your cup. This process involves companies making farming equipment and chemicals, transportation services, roasters and employees at cafés around the world — just to name a few players.
Because humans need food, some investors may find food stocks consistent and stable. A growing health-conscious population has also made vegan stocks, organic-food stocks and similar securities grow in popularity.
The Canadian food and beverage industry produced $117.8 billion worth of goods in 2019, making it Canada’s second largest manufacturing industry. It accounts for 17% of the country’s manufacturing sales and 2% of its Gross Domestic Product (GDP). According to Statista, the United States food market revenue in 2020 has amounted to nearly $924.39 million and it’s expected to grow annually by 1.8%.
But to invest in food stocks, you need to know what role these companies play in the food-production process and the risks involved.
Restaurant stocks are a subcategory of food stocks. These include stocks of full-service restaurants, fast-food establishments and snack bars. But they may be particularly volatile.
At the beginning of the COVID-19 pandemic, many restaurants were forced to temporarily close. Some didn’t come back. And the ones that did may face particular challenges such as smaller menus and capacity. In other words, many can’t operate at full force and that may hurt their bottom line.
Still, you can find restaurant stocks tied to large chains that operate throughout the country. Many restaurants are also benefiting from delivery services like DoorDash. In any case, you should carefully evaluate restaurant stocks and the companies behind them before you make a decision.
Because many industries and companies are involved in food production, it can run into several risks. For instance, weather can severely affect crop production. Political turmoil in a country can substantially impact the food and raw material they export.
Most recently, the COVID-19 pandemic has affected how food is processed, handled and transported. The lockdowns and social distancing rules had harmful effects on the restaurant industry. In some states like New York, restaurants are only beginning to allow patrons inside at limited capacity after having been closed for months.
Grocery stocks are a different type of food stocks, encompassing supermarkets and other major stores where you can buy prepped food and food ingredients. While the pandemic hurt many restaurants, many grocery stores saw a spike in revenue.
For example, Costco stocks closed at $281 on February 24, 2020—just a couple of weeks before the World Health Organization elevated COVID-19 from a public health emergency to a full on pandemic. By November 23, Costco stock had risen 38% to $388. By November 30, it reached an all-time high of $391.77.
Regardless of what types of food stocks you invest in, make sure you carefully analyze your options as well as the risks they may face.
If you’re not into stock picking, you may consider investing in exchange traded funds (ETFs). These have become popular in recent years because they offer access to a diversified basket of stocks. Here are some food stock ETFs you may be interested in.
To invest in food stocks, you need to open a brokerage account. Shop around to explore your options.
Because food will be consistently in demand, food stocks may sound like stable investments. But they carry risks and require careful analysis. Before you start investing in food stocks, carefully compare stock trading platforms.
A simple guide to buying stocks in your favourite European soccer team.Read more…
Rethink how you grow your money with these green investment strategies and key green stocks.Read more…
Using our proprietary algorithm, we searched the TSX, NYSE and Nasdaq to find the 10 best penny stocks to buy now.Read more…
You can’t buy NFL stock directly, but you can invest in companies that back the football industry.Read more…
Compare 15 of the best stock picking services, and learn how to choose the best option for your needs.Read more…
Here are the best Canadian investment newsletters to help you boost your investment knowledge and grow your wealth.Read more…
Steps to owning and managing CURA stock, with 24-hour and historical pricing before you buy.
A simple guide to buying stocks in your favourite European soccer team.
Steps to owning and managing JUVE stock, with 24-hour and historical pricing before you buy.
Steps to owning and managing ASR stock, with 24-hour and historical pricing before you buy.
Steps to owning and managing BVB stock, with 24-hour and historical pricing before you buy.
Everything we know about the Lead Real Estate Co. IPO plus information on how to buy in.
Everything we know about the Alopexx IPO plus information on how to buy in.
Everything we know about the Third Harmonic Bio IPO plus information on how to buy in.
Everything we know about the LINKBANCORP IPO plus information on how to buy in.
Everything we know about the Corebridge Financial IPO plus information on how to buy in.
You must be logged in to post a comment.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.