The Best Canadian Food Stocks in December 2023

Investors can add the best Canadian food stocks to their portfolios for capital protection and stability.

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Food stocks belong in the consumer staples sector, the most stable among TSX’s 11 primary sectors. Investors add food stocks to their portfolios, not for growth or enormous gains but for capital protection and stability. People consume food every day, and that demand always stays strong.

The best Canadian food stocks to own this month, in order of size, are Empire Co. (TSX:EMP.A), Premium Brands Holdings (TSX:PBH), and The North West Company (TSX:NWC). Their stock prices could spike and dip, but the businesses endure economic downturns.

Top-of-mind choice

The top-of-mind choice in Canada’s food industry is Empire Co. It has the size ($9.43 billion market cap), carries the business through a powerful brand (Sobeys) and has a rich history in food retailing. Never mind if the dividend yield (1.95%) is because you’re buying peace of mind ($37.73 per share). As of this writing, the year-to-date gain is 7.83% versus the TSX’s 5.11%.

In the first quarter (Q1) of fiscal 2024 (three months that ended August 5, 2023), sales increased 1.7% to $8.07 billion versus Q1 fiscal 2023, while net earnings jumped 39.2% year over year to $261 million. The profit includes proceeds from selling 56 fuel retail sites to a wholly-owned subsidiary of Shell Canada.

Empire’s president and chief executive officer (CEO), Michael Medline, credits the stronger top-line performance in the Full-Service banners and double-digit sales growth in the Discount for the excellent start to fiscal 2024. He also said the company has solid control over its retail margins.

Medline added that the quarterly results demonstrate the team’s ability to consistently execute, regardless of the economic environment.

  • We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if Empire Co. Ltd made the list!

Accelerated organic growth      

Premium Brands is a specialty food manufacturer and distributor in Canada and the United States. The $3.94 billion food company has several brands in the Specialty Products and Food Distribution business segments. At $88.31 per share, PBH is up nearly 10% year to date. You can partake in the 3.48% dividend if you invest today.

In Q3 2023, the company’s $1.64 billion revenue and $158.8 million adjusted earnings before interest, taxes, depreciation, and amortization were new records. However, earnings declined 9.4% to $39.4 million. Its president and CEO, Mr. Paleologou, said the quarterly results reflect solid progress in PBH’s long-term value creation objective.

Mr. Paleologou expects the organic growth rate to accelerate over the next quarters with the commissioning of five major capacity expansion projects soon.

Captured markets

The North West Company thrives from its captured markets. The $1.76 billion food retailer and seller of everyday products serves hard-to-reach communities and far-flung markets in Canada, rural Alaska, the South Pacific, and the Caribbean.

Like Empire and PBH, this consumer-defensive stock displays stability amid a challenging environment. At $37.03 per share (+7.62% year to date), NWC pays an attractive 4.36% dividend.

In Q2 fiscal 2023, consolidated sales rose 6.8% to $618.1 million versus Q2 fiscal 2022, while net earnings climbed 17.5% year over year to $38 million. Its president and CEO, Dan McConnell, said NWC continues to take a balanced approach to managing cost inflation pressures. He also sees the growth potential of the business.

Rock-solid investment

Food stocks are doing well despite the uncertainties and elevated market volatility. Empire Co. is a rock-solid investment, although PBH and NWC can also stabilize your stock portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends North West. The Motley Fool has a disclosure policy.

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