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According to Peter Lynch, an American investor, mutual fund manager and author of several books on trading, novice traders have an interest in finding companies that they are genuinely interested in or in which they invest daily. This makes sense: this would make the trader more inclined to follow the performance of the company, read the news and keep an eye on the industry in general. While some areas like technology or finance may require more advanced knowledge, the food industry is simpler. It's also pretty stable and reliable: you might not buy the next iPhone, but everyone needs to eat. Food companies are the ones we interact with the most, such as when we shop, go out to eat, or order a delivery.
Overview of the food industry
Like many other industries, the food industry has been affected by COVID-19. People's habits have changed, but there is no one general trend that all people follow. Some people, while staying at home, turned to delivery services and started ordering more ready meals, while others discovered a new interest in cooking. That said, consumer fundamentals tend to outperform those of other businesses in times of economic decline.
When trading CFDs with companies in the food industry, you need to understand what role the company plays in the food chain and how it can defend itself against its competitors from a long-term perspective. The company can be engaged in agriculture, processing, food distribution, it can be a producer of agricultural machinery, a grocery store or a restaurant. All being involved in the same field, companies will have different concerns and struggles. If the business specializes in agriculture, the reasons for its success or failure will be different than for a business that specializes in buying groceries online.
Let's take a closer look at 5 food company stocks that can be found on the IQ Option platform.
The Coca-Cola Company is the world's largest manufacturer and supplier of concentrates, syrups and non-alcoholic beverages. It is one of the most recognized brands in the world: it is hard to find someone who has never heard of Coca-Cola drink and its cultural impact is undeniable. The drink ranks number 1 best-selling in most countries and the wide variety of other sodas with alternative flavors fill the market. The company continues to grow and consistently tops the list based on performance and revenue: This year, Coca-Cola was included in the Fortune 500 list of America's largest companies.
Although the company is criticized for its plastic production and waste, it continues to grow and it is hard to imagine that the popularity of the sugary drink will wane anytime soon. Currently, the stock is trading at $ 49.4.
Starbucks is another food company specializing in beverages that made it to the Fortune 500 list. This chain of cafes serves hot and cold drinks, including Pumpkin Spice Latte – their most popular seasonal drink, as well as tea, pastries, snacks and hot sandwiches. Starbucks is also known for its line of containers which includes mugs and tumblers, many of which are specially designed for certain locations, making them an attractive tourist souvenir.
In early 2020, Starbucks controlled about 40% of the U.S. coffee market, but the company suffered a decline in sales during the pandemic shutdown. The shares bottomed out at around $ 49.8 in March and have started to gain momentum since, with the current price at $ 83.9 per share.
This will certainly be of interest to vegans since Beyond Meat, for more than 10 years now, has specialized in meatless proteins. It makes plant-based meat that mimics the feel and taste of real chicken and real beef. Their burgers are made from protein from rice, peas and beans and have the qualities of a regular burger – the consistency and even the "bleeding," which is achieved by using beetroot juice. Even if you prefer meat to plant-based substitutes, it's hard to argue with the advances in food technology this company has made.
Beyond Meat tries to be as sustainable as possible and strives to replace plastic sausage trays with compostable alternatives. Today, the company's shares continue to show positive trends and are currently trading at $ 148.7 per share.
Being one of the largest producers of condiments, Heinz is certainly worth considering when choosing which food industry assets to trade. Heinz is best known for its ketchups and other sauces, which are widely used by individuals and restaurants. However, its product line also includes canned and frozen products. The company is estimated to control approximately 60% of the ketchup market in the United States and rank among the most popular condiment brands in other countries. Although the asset has seen a steady decline over the past several years, in 2020 the stock managed to rally and is currently trading at $ 29.6.
Last, but certainly not the least on the list of food companies is McDonald's. It is almost unnecessary to talk about McDonald's: everyone knows the delicious burgers, cheeseburgers and fries that smell like mouth watering. McDonald's is the world's largest restaurant chain by revenue, with outlets in more than 100 countries.
Although the future is still uncertain, the 80-year history of the company makes its success indisputable. On a 5-year chart, McDonald's is showing steady growth with a slight setback in March 2020. Since then, the stock price has nearly doubled and it is currently trading at $ 216.7.
Do you trade with food companies? Let us know your thoughts on them in the comments below!
* Information about past performance is not a reliable indicator of future performance.
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Source: IQOption blog (blog.iqoption.com) 2020-09-23 10:16:07
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