Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 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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5 Undervalued Food Processing Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Food Processing industry for Monday, September 11, 2023. 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.

Archer-Daniels-Midland Co’s Value Grade

Value Grade:

Archer-Daniels-Midland Company is a human and animal nutrition company. The Company is an agricultural supply chain manager and processor. It operates through three business segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. The Ag Services and Oilseeds segment includes global activities related to the origination, merchandising, transportation, and storage of agricultural raw materials, and the crushing and further processing of oilseeds such as soybeans and soft seeds into vegetable oils and protein meals. The Carbohydrate Solutions segment is engaged in corn and wheat wet and dry milling and other activities. The Nutrition segment is engaged in the manufacturing, sale, and distribution of a range of ingredients and solutions, including plant-based proteins, natural flavors, flavor systems, natural colors, emulsifiers, soluble fiber, polyols, hydrocolloids, probiotics, prebiotics, enzymes, botanical extracts, and other specialty food and feed ingredients.

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.

Archer-Daniels-Midland Co has a Value Score of 72, which is considered to be undervalued.

When you look at Archer-Daniels-Midland Co’s price-to-sales ratio at 0.43 compared to the industry median at 0.94, this company has a lower price relative to revenue compared to its peers. This could make Archer-Daniels-Midland Co’s stock more attractive for value investors.

Archer-Daniels-Midland Co’s price-earnings ratio is 10.52 compared to the industry median at 21.98. This means it has a lower share price relative to earnings compared to its peers. This could make Archer-Daniels-Midland Co more attractive for value investors.

Now, let’s assess Archer-Daniels-Midland Co’s EV/EBITDA ratio, also known as enterprise multiple. At 9.3, when compared to the industry median of 12.6, 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. Archer-Daniels-Midland 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. Archer-Daniels-Midland Co’s price-to-book ratio is lower than its industry median ratio of 1.99. This could make Archer-Daniels-Midland Co more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Archer-Daniels-Midland Co’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Archer-Daniels-Midland Co’s price-to-free-cash-flow ratio is lower than its industry median ratio of 29.61. This could make Archer-Daniels-Midland Co more attractive because the lower P/FCF ratio indicates that Archer-Daniels-Midland 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.

Better Choice Company Inc’s Value Grade

Value Grade:

Better Choice Company Inc. is a pet health and wellness company. The Company is focused on providing pet products and services. It has a portfolio of over 100 active premium and premium animal health and wellness products for dogs and cats, which includes products sold under the Halo brand across multiple forms, including foods, treats, toppers, dental products, chews, grooming products and supplements. Its products consist of naturally formulated premium kibble and canned dog and cat food, freeze-dried raw dog food and treats, vegan dog food and treats, oral care products and supplements. It groups channels of trade into four distinct categories: e-commerce, Brick & Mortar, direct to consumer (DTC) and international. Brick & Mortar primarily includes the sale of products to pet specialty retailers such as Petco, Pet Supplies Plus and neighborhood pet stores, as well as to select grocery chains. Its direct to consumer includes the sale of product through its website www.halopets.com.

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.

Better Choice Company Inc has a Value Score of 88, which is considered to be undervalued.

Better Choice Company Inc’s price-to-book ratio is higher than its peers. This could make Better Choice Company Inc less attractive for value investors when compared to the industry median at 1.99.

You can read more about Better Choice 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.

International Flavors & Fragrances Inc’s Value Grade

Value Grade:

International Flavors & Fragrances Inc. is a creator and manufacturer of food, beverage, health and biosciences, scent and pharma solutions and complementary adjacent products. The Company?s segments include Nourish, Health & Biosciences, Scent and Pharma Solutions. The Nourish segment comprises of ingredients, flavors and food designs, with a diversified portfolio across natural and plant-based specialty food ingredients and flavor compounds. The Health & Biosciences comprises of health, cultures and food enzymes, home and personal care, animal nutrition and grain processing. The Scent segment comprises of fragrance compounds, including fine fragrances and consumer fragrances; fragrance ingredients, and cosmetic active ingredients. The Pharma Solutions segment produces a portfolio that includes cellulosics and seaweed-based pharmaceutical excipients, used to improve the functionality and delivery of active pharmaceutical ingredients.

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.

International Flavors & Fragrances Inc has a Value Score of 63, which is considered to be undervalued.

International Flavors & Fragrances Inc’s price-to-book ratio is higher than its peers. This could make International Flavors & Fragrances Inc less attractive for value investors when compared to the industry median at 1.99.

You can read more about International Flavors & Fragrances 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.

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 61, which is considered to be undervalued.

TDH Holdings Inc’s price-earnings ratio is 8.8 compared to the industry median at 22.0. 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 1.99.

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.

Tofutti Brands Inc’s Value Grade

Value Grade:

Tofutti Brands Inc. is engaged in the development, production and marketing of dairy-free, vegan frozen desserts, cheeses and other food products. The Company's TOFUTTI brand products are vegan, dairy-free products that contain no butterfat, cholesterol or lactose and use soy and other vegetable proteins. The Company's dairy-free vegan cheese products include BETTER THAN CREAM CHEESE, TOFUTTI WHIPPED BETTER THAN CREAM CHEESE, BETTER THAN SOUR CREAM, TOFUTTI DIPPITY DO DAH DIPS, TOFUTTI AMERICAN VEGAN CHEESE SLICES and BETTER THAN RICOTTA CHEESE. Its frozen desserts include TOFUTTI and TOFUTTI CUTIES. The Company sells products in the United States, including Atlanta, Baltimore, Boston, Charlotte, Chicago, Cincinnati, Cleveland, Dallas, Denver, Detroit, Houston, Jacksonville, Kansas City, Los Angeles, Miami, Milwaukee, Minneapolis, Nashville, New York, Orlando, Philadelphia, Phoenix, Portland, Richmond, Salt Lake City, San Diego, San Francisco, Seattle, St. Louis, Tampa and Washington.

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.

Tofutti Brands Inc has a Value Score of 87, which is considered to be undervalued.

Tofutti Brands Inc’s price-to-book ratio is higher than its peers. This could make Tofutti Brands Inc less attractive for value investors when compared to the industry median at 1.99.

You can read more about Tofutti Brands 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 5 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.

• Archer-Daniels-Midland Co stock has a Value Grade of B.
• Better Choice Company Inc stock has a Value Grade of A.
• International Flavors & Fragrances Inc stock has a Value Grade of B.
• TDH Holdings Inc stock has a Value Grade of B.
• Tofutti Brands Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 5 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.

• 5 Undervalued Food Processing Stocks for Monday, September 11
• 5 Undervalued Food Processing Stocks for Friday, September 08
• What You Need to Know About Calavo Growers, Inc.'s Q3 Earnings
• Why Calavo Growers, Inc.’s (CVGW) Stock Is Down 14.62%

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