A trio of food industry companies received a bullish rating today from financial services company Jefferies Financial Group, including cookie and cracker maker Mondelez International ( MDLZ 1.93% ). The other companies highlighted by Jefferies analyst Rob Dickerson in today's analysis are snack foods manufacturer Hostess Brands, Inc. ( TWNK 2.75% ) and frozen foods company Nomad Foods ( NOMD 0.96% ).
Two of the three companies Jefferies recommends have recently made acquisitions, demonstrating their focus on continued growth, plus strong enough resources to pursue a strategy of expansion. Mondelez purchased Hu Master Holdings, a "paleolithic" healthier chocolate maker. Meanwhile, Nomad Foods is preparing to acquire several successful European frozen food brands from Fortenova Group.
Dickerson says in his research note that Mondelez is "advantageously positioned in faster-growth snacking categories and benefiting from its global scale," while Nomad Foods "remains very well capitalized, leading likely to further repurchase and/or acquisition activity." The Jefferies analyst states the value of Nomad's acquisitions hasn't yet been priced into its stock by the market.
As for Hostess, Jefferies thinks the company's margins and top line will both grow vigorously in 2021, the latter "driven by C-store recovery, distribution gains, base innovation, and acquisition revenue synergies." Hostess Brands also received a thumbs-up from JP Morgan last month, with the investment bank's analyst Ken Goldman remarking, "We see no reason why TWNK should not be a strong outperformer in 2021."
Snack food companies such as Mondelez got a huge boost during the early days of the COVID-19 pandemic in the U.S., as did frozen food sellers like Nomad. The same companies appear poised to profit significantly again during the rebound expected from the continued rollout of COVID-19 vaccination.