Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 stocks made the list for top value stocks in the Food Processing industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest Food Processing Stock News

Before choosing which top Food Processing stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

Innovation in food processing technology and an upsurge in the demand for processed food are expected to drive the market over the next few years. Dietary shifts including increasingly prominent health-conscious diets in both developed and developing countries are also predicted to fuel growth. Despite the long-term growth outlook, supply chain struggles that began during the pandemic persist. To combat pressure on margins, many are raising prices of goods and ultimately are expected to have stronger margins at the end of the year. Additionally, it has been difficult to predict the availability of products. Due to this, many companies must act as their own suppliers and source their own goods. Food processors hope this will help them deal with demand better. Food-at-home demand is expected to remain permanently elevated versus pre-pandemic levels. Consumption volume will likely face some downward pressure in 2022 due to price increases and the re-opening of the broader economy, which tends to support food-away-from-home demand. New consumer habits and increased work-from-home adoption are expected to keep food-at-home demand strong. Fading stimulus benefits should allow private labels (i.e., store brands) to make a comeback in 2022 after losing market share over the past two years to branded products.

Why Focus on Undervalued Food Processing Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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7 Undervalued Food Processing Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 7 undervalued stocks in the Food Processing industry for Thursday, January 25, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Food Processing industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Central Garden & Pet Co’s Value Grade

Value Grade:

Central Garden & Pet Company is engaged in the garden and pet industries in the United States. Its segments include Pet and Garden. Its Pet segment includes dog and cat supplies such as dog treats and chews, toys, pet beds and grooming products, waste management and training pads, pet containment; supplies for aquatics, small animals, reptiles and pet birds, including toys, cages and habitats, bedding, food and supplements; products for equine and livestock, animal and household health and insect control products; live fish and small animals as well as outdoor cushions. These products are sold under brands such as Aqueon, Cadet, Comfort Zone, Farnam, Four Paws K&H; Pet Products (K&H;), Kaytee, Nylabone and Zilla. Its Garden segment includes lawn and garden consumables such as grass seed, vegetable, flower and herb packet seed; wild bird feed, bird houses and other birding accessories; weed, grass, and other herbicides, insecticide and pesticide products; fertilizers and live plants.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Central Garden & Pet Co has a Value Score of 65, which is considered to be undervalued.

When you look at Central Garden & Pet Co’s price-to-sales ratio at 0.74 compared to the industry median at 0.92, this company has a lower price relative to revenue compared to its peers. This could make Central Garden & Pet Co’s stock more attractive for value investors.

Central Garden & Pet Co’s price-earnings ratio is 19.92 compared to the industry median at 20.38. This means it has a lower share price relative to earnings compared to its peers. This could make Central Garden & Pet Co more attractive for value investors.

Now, let’s assess Central Garden & Pet Co’s EV/EBITDA ratio, also known as enterprise multiple. At 9.3, when compared to the industry median of 10.5, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Central Garden & Pet Co’s shareholder yield is higher than its industry median ratio of 0.00%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Central Garden & Pet Co’s price-to-book ratio is lower than its industry median ratio of 1.92. This could make Central Garden & Pet Co more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Central Garden & Pet Co’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Central Garden & Pet Co’s price-to-free-cash-flow ratio is lower than its industry median ratio of 23.28. This could make Central Garden & Pet Co more attractive because the lower P/FCF ratio indicates that Central Garden & Pet Co is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Chanson International Holding’s Value Grade

Value Grade:

Chanson International Holding is a holding company mainly engaged in the manufacturing and sales of a wide selection of bakery products, seasonal products and beverage products. The Company mainly sells products in the PRC (People's Republic of China) Stores and the U.S. (the United States) Stores through the George Chanson, Patisserie Chanson and Chanson brand bakery chains. The PRC Stores mainly offer bakery products, beverage products, and contract third-party manufacturers to produce seasonal products. The U.S. Stores primarily offer bakery products, breakfast, lunch and all-day brunch, bar food, and other light meals, as well as beverage products made within the kitchen in the store. The Company primarily distributes its products in Mainland China and the United States markets.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Chanson International Holding has a Value Score of 94, which is considered to be undervalued.

Chanson International Holding’s price-to-book ratio is higher than its peers. This could make Chanson International Holding less attractive for value investors when compared to the industry median at 1.92.

You can read more about Chanson International Holding’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Herbalife Ltd’s Value Grade

Value Grade:

Herbalife Ltd. is a global nutrition company. The Company sells weight management; targeted nutrition; energy, sports and fitness; and other nutrition products to and through a network of independent members (Members). Its products include meal replacements, protein shakes, teas, aloes, high-protein snacks, vitamins and supplements, sports nutrition and outer nutrition products. The Company offers a range of meal replacement products, such as protein shakes, bars and soups. Its snack portfolio includes a variety of sweet, savory and creamy options, such as high protein iced coffee, protein bars, snack shakes, soups, baking mixes and others. Its Herbal Aloe Concentrate is a beverage formulated with aloe vera, which can be mixed with water, tea or protein shake. It has also developed a portfolio of dietary supplements, encompassing solutions for heart health, digestive health, immunity and others. It sells products in 95 markets across the world.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Herbalife Ltd has a Value Score of 90, which is considered to be undervalued.

Herbalife Ltd’s price-earnings ratio is 6.5 compared to the industry median at 20.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Herbalife Ltd more attractive for value investors.

You can read more about Herbalife Ltd’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Coffee Holding Co., Inc.’s Value Grade

Value Grade:

Coffee Holding Co., Inc. is an integrated wholesale coffee roaster and dealer in the United States. The Company?s products are divided into three categories: Wholesale Green Coffee, Private Label Coffee and Branded Coffee. Wholesale Green Coffee product category includes unroasted raw beans, which it imports and sells to large and small roasters and coffee shop operators. Private Label Coffee product category includes roasted, blended and packaged coffee, which it sells under the specifications and names of others, including supermarkets that want to have their own brand name on coffee. Branded Coffee product category includes roasted and blended coffee to its own specifications and packaging. It sells Branded Coffee products under its eight brand names in different segments of the market. Its private-label and branded coffee products are sold across the United States and certain countries in Asia to supermarkets, wholesalers, and individually owned and multi-unit retail customers.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Coffee Holding Co., Inc. has a Value Score of 97, which is considered to be undervalued.

Coffee Holding Co., Inc.’s price-to-book ratio is higher than its peers. This could make Coffee Holding Co., Inc. less attractive for value investors when compared to the industry median at 1.92.

You can read more about Coffee Holding Co., Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Nomad Foods Ltd’s Value Grade

Value Grade:

Nomad Foods Limited is a frozen food company. The Company?s portfolio of food brands within the frozen category includes Birds Eye, Findus, iglo, Belviva, Aunt Bessie?s, Goodfella?s, and others. Its products are sold primarily through grocery retailers under the Birds Eye brand in the United Kingdom and Ireland; Findus in Italy, France, Spain, Sweden, Switzerland, and Norway; Iglo in Germany and other continental markets; La Cocinera in Spain, Ledo in south-eastern Europe, and Frikom in Serbia and North Macedonia. Its product offerings include frozen fish products, such as fish fingers, coated fish, natural fish; ready to cook vegetable products, such as peas and spinach; and frozen poultry and meat products, such as nuggets, grills, and burgers. It also includes a variety of other offerings, such as soups, pizza, bakery goods and meat substitutes. The Company manufactures, sells, and distributes a range of branded frozen food products across over 13 European countries.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Nomad Foods Ltd has a Value Score of 79, which is considered to be undervalued.

Nomad Foods Ltd’s price-earnings ratio is 13.4 compared to the industry median at 20.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Nomad Foods Ltd more attractive for value investors.

Nomad Foods Ltd’s price-to-book ratio is higher than its peers. This could make Nomad Foods Ltd less attractive for value investors when compared to the industry median at 1.92.

You can read more about Nomad Foods Ltd’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

TDH Holdings Inc’s Value Grade

Value Grade:

TDH Holdings Inc is principally engaged in the production and sales of of pet foods. The Company provides pet food for pet owners in China and worldwide. The Company offers six product lines: pet chews products include various bones, rawhide and similar products; dried pet snacks include various fillets, strips and jerkies (chicken, duck, pork, lamb, etc.); wet canned pet foods include various fillets, strips and jerkies (chicken, duck, pork, lamb, etc.); dental health snacks foods; baked pet biscuits and other pet foods.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

TDH Holdings Inc has a Value Score of 64, which is considered to be undervalued.

TDH Holdings Inc’s price-earnings ratio is 7.5 compared to the industry median at 20.4. This means that it has a lower price relative to its earnings compared to its peers. This makes TDH Holdings Inc more attractive for value investors.

TDH Holdings Inc’s price-to-book ratio is higher than its peers. This could make TDH Holdings Inc less attractive for value investors when compared to the industry median at 1.92.

You can read more about TDH Holdings Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Real Good Food Company Inc’s Value Grade

Value Grade:

The Real Good Food Company, Inc. is a frozen food company. The Company develops, markets, and manufactures foods designed to be high in protein, low in sugar, and made from gluten-and grain-free ingredients that are intended to be sold in the health and wellness (H&W;) segment of the frozen food category. It offers nutritious options across breakfast, lunch, dinner, and snacking occasions, which are available in approximately 15,000 stores nationwide, and directly from its website at www.realgoodfoods.com. Its branded products are sold to consumers through an increasing number of locations in retail channels, primarily in natural and conventional grocery, drug, club, and mass merchandise stores, including Walmart, Kroger, and Costco. It produces and sells entrees, bowls, breakfast sandwiches, enchiladas, other H&W; products and snacks within the frozen food category. Its craveable products are offered in ready-to-heat and ready-to-cook formats for consumers to prepare.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Real Good Food Company Inc has a Value Score of 76, which is considered to be undervalued.

Real Good Food Company Inc’s price-to-book ratio is higher than its peers. This could make Real Good Food Company Inc less attractive for value investors when compared to the industry median at 1.92.

You can read more about Real Good Food Company Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Food Processing Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Food Processing stocks as well as other industrys.

Choosing Which of the 7 Best Food Processing Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Central Garden & Pet Co stock has a Value Grade of B.
• Chanson International Holding stock has a Value Grade of A.
• Herbalife Ltd stock has a Value Grade of A.
• Coffee Holding Co., Inc. stock has a Value Grade of A.
• Nomad Foods Ltd stock has a Value Grade of B.
• TDH Holdings Inc stock has a Value Grade of B.
• Real Good Food Company Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 7 undervalued stocks in the Food Processing industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Food Processing Stocks

Want to learn more about Food Processing stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 7 Undervalued Food Processing Stocks for Thursday, January 25
• 7 Undervalued Food Processing Stocks for Wednesday, January 24
• What You Need to Know About Archer-Daniels-Midland Co's Q3 Earnings
• What You Need to Know About B&G; Foods Inc's Q3 Earnings

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