Why do some food corporations survive the test of time? Why have both McDonald's (MCD 0.47%) and Hershey's (HSY 0.40%) provided seemingly unstoppable returns for investors? Here are some qualities both of these multinational corporations share:
- Resilience: A company's ability to adapt and remain "elastic" during challenging times and market environments.
- Innovation: The capability of a business to differentiate itself, providing a distinct advantage over competitors.
- Globalization: Expanding the market of an American company's products beyond U.S. borders to an international market.
Here are 3 food stocks to consider buying. Two you've heard of and one is a potential up-and-comer in the food industry.
McDonald's decisive action
McDonald's has proven time and time again its ability to combat challenges. The company has faced numerous lawsuits as well as negative press and consumer criticism. Instead of hiding from the negativity, McDonald's has addressed these challenges head-on. For example, when confronted about its food being unhealthy, McDonald's rolled out its Global Advisory Council, an international team of experts formed to provide guidance on nutrition and children's well being.
McDonald's is also one of the most innovative fast-food chains of all time. One major example is the restaurant chain's drive-thru windows. In 1975, when U.S. Army soldiers stationed at Fort Huachuca in Sierra Vista, Arizona wanted Big Macs but weren't able to exit their cars in uniform, McDonald's provided the drive-thru solution. A first for McDonalds, this innovation would forever change the way Happy Meals were purchased.
Globalization has also been key to McDonald's' dominance in the market. With nearly 40,000 locations across over 100 countries, McDonald's' mission to "feed and foster communities" around the globe has paid off well.
Image source: Getty Images.
Hershey's investment in infrastructure
When times get tough, people tend to eat more chocolate. While demand for chocolate seems nearly insatiable, Hershey's ran into supply chain limitations when the COVID-19 pandemic first hit. In response, the company diversified its production capabilities to accommodate for disruptions, investing in new facilities across the world.
Never taking its strong brand recognition and loyalty for granted, Hershey's has remained inventive. The company's "consumer-centered approach to innovation" takes new trends in flavors and snacking into account, attempting to better understand changes in shopping habits. New Hershey's product innovations include organic Reese's Peanut Butter Cups and Kit Kat Thins.
Now sold in over 90 countries worldwide, Hershey's has steadily grown its international presence by concentrating efforts on branded, high-margin products while streamlining operations. Hershey's international sales continue to grow as the company eats more and more share of the international sweets market.
J&J Snack Foods' perseverance
While you've probably never heard of J&J Snack Foods (JJSF 0.64%), you've more than likely enjoyed some of J&J's products. Most known for the ICEE and SuperPretzel, J&J offers a diverse selection of novelty snack foods sold in convenience stores, movie theaters, malls, hotels, college campuses, and supermarkets.
Recently proving its elasticity as a business, J&J overcame a massive challenge, albeit a self-imposed one. Earlier this year, the company experienced major setbacks after implementing a new enterprise resource planning (ERP) system. While the new system created both operational and supply chain-related issues, the company worked tirelessly to resolve the issue, and J&J Snack Foods just posted its best sales quarter in company history.
J&J Snack Foods continues to innovate its well-balanced portfolio of snack food options. For example, along with new flavors of the ever-successful ICEE frozen beverage, J&J recently rebranded its line of churros. One of the fastest-growing categories in foodservice, churro sales in casual restaurants are expected to grow more than 10% by 2025. These fried-dough treats have reached a 78% awareness rate in the U.S. and provide solid margins for J&J.
J&J has already started to branch out internationally, with ICEE products available in Canada, Mexico, China, Australia, Israel, the Middle East, Central America, and Europe. With a global distribution infrastructure in place, J&J is well positioned for international expansion. If J&J Snack Foods can emulate what McDonald's and Hershey's have done, it can grow into a multinational snack food empire.
