Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Food Retail & Distribution 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.

Why Focus on Undervalued Food Retail & Distribution 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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3 Undervalued Food Retail & Distribution Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Food Retail & Distribution industry for Monday, March 18, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Food Retail & Distribution 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.

AMCON Distributing Co’s Value Grade

Value Grade:

AMCON Distributing Company is a distributor of consumer products, including beverages, candy, tobacco, groceries, foodservice, frozen and refrigerated foods, automotive supplies and health and beauty care products. The Company’s Wholesale Distribution segment distributes consumer products and provides a range of programs and services to its customers. The segment serves approximately 7000 retail outlets, including convenience stores, grocery stores, liquor stores, drug stores, and tobacco shops. The Company’s Retail Health Food segment, through its Healthy Edge, Inc. subsidiary, is a specialty retailer of natural/organic groceries and dietary supplements, which focuses on nutritional consultation. The Company has distribution centers in Illinois, Missouri, Nebraska, North Dakota, and others. The Company operates approximately 15 health food retail stores located across the Midwest and Florida. It owns a distribution facility which consists of 249,200 square feet set on 38 acres.

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.

AMCON Distributing Co has a Value Score of 84, which is considered to be undervalued.

When you look at AMCON Distributing Co’s price-to-sales ratio at 0.04 compared to the industry median at 0.37, this company has a lower price relative to revenue compared to its peers. This could make AMCON Distributing Co’s stock more attractive for value investors.

AMCON Distributing Co’s price-earnings ratio is 11.46 compared to the industry median at 20.78. This means it has a lower share price relative to earnings compared to its peers. This could make AMCON Distributing Co more attractive for value investors.

Now, let’s assess AMCON Distributing Co’s EV/EBITDA ratio, also known as enterprise multiple. At 8.4, when compared to the industry median of 8.3, the company may be considered overvalued 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. AMCON Distributing Co’s shareholder yield is lower 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. AMCON Distributing Co’s price-to-book ratio is lower than its industry median ratio of 2.18. This could make AMCON Distributing Co more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at AMCON Distributing Co’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. AMCON Distributing Co’s price-to-free-cash-flow ratio is lower than its industry median ratio of 20.09. This could make AMCON Distributing Co more attractive because the lower P/FCF ratio indicates that AMCON Distributing 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.

Greenlane Holdings Inc’s Value Grade

Value Grade:

Greenlane Holdings, Inc. is a holding company. The Company provides a global platform for the development and distribution of cannabis accessories, vape devices, and lifestyle products. The Company operates through two segments: Consumer Goods and Industrial Goods. The Consumer Goods segment focuses on serving consumers across wholesale, retail and e-commerce operations through both its brands, including Eyce, DaVinci, Marley Natural, Keith Haring, and Higher Standards, as well as lifestyle products and accessories from brands, such as Storz and Bickel, Grenco Science, and more. The Industrial Goods segment focuses on serving the cannabis brands, operators, and retailers through its wholesale operations by providing ancillary products essential to their growth, such as customizable packaging and supply products, which includes its Greenlane Brand Pollen Gear and vaporization solutions offering, which includes CCELL branded products.

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.

Greenlane Holdings Inc has a Value Score of 75, which is considered to be undervalued.

Greenlane Holdings Inc’s price-to-book ratio is higher than its peers. This could make Greenlane Holdings Inc less attractive for value investors when compared to the industry median at 2.18.

You can read more about Greenlane 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.

J Sainsbury plc (ADR)’s Value Grade

Value Grade:

J Sainsbury PLC is a United Kingdom-based merchandise retail company. It operates through three segments: Retail-Food, Retail-General Merchandise and Clothing and Financial Services. The Retail segment comprises the sale of food, household, general merchandise, clothing and fuel primarily through store and online channels. The Financial Services segment comprises banking and insurance services through Sainsbury’s Bank and Argos Financial Services. It is focused on food and convenient shopping, whether in-store or online, is supported by its brands, including Argos, Habitat, Tu, Nectar and Sainsbury’s Bank. Its Tu is a clothing retailer that offers a range of womenswear, menswear and childrenswear. Tu also offers a range of specialist sizes with its own brand petites and maternity offers. It also offers groceries under various categories, such as fruit and veg, meat and fish, dairy, chilled, bakery, frozen, food cupboard, drinks, health and beauty, baby, household, pet and home.

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.

J Sainsbury plc (ADR) has a Value Score of 73, which is considered to be undervalued.

J Sainsbury plc (ADR)’s price-earnings ratio is 80.7 compared to the industry median at 20.8. This means that it has a higher price relative to its earnings compared to its peers. This makes J Sainsbury plc (ADR) less attractive for value investors.

J Sainsbury plc (ADR)’s price-to-book ratio is higher than its peers. This could make J Sainsbury plc (ADR) less attractive for value investors when compared to the industry median at 2.18.

You can read more about J Sainsbury plc (ADR)’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 Retail & Distribution 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 Retail & Distribution stocks as well as other industrys.

Choosing Which of the 3 Best Food Retail & Distribution 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.

• AMCON Distributing Co stock has a Value Grade of A.
• Greenlane Holdings Inc stock has a Value Grade of B.
• J Sainsbury plc (ADR) stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 undervalued stocks in the Food Retail & Distribution 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 Retail & Distribution Stocks

Want to learn more about Food Retail & Distribution 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.

• 3 Undervalued Food Retail & Distribution Stocks for Monday, March 18
• 3 Undervalued Food Retail & Distribution Stocks for Friday, March 15
• 3 Undervalued Food Retail & Distribution Stocks for Thursday, March 14
• Why United Natural Foods Inc’s (UNFI) Stock Is Down 4.20%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.