The Best Canadian Food Stocks in December 2023

Inflation has hurt food stocks, but as these companies see a recovery, share prices should come soaring back upwards.

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During all this market volatility, and even with a better market outlook, it’s still important to stay focused. That means finding stocks that aren’t just going to do well for now, but for the future. Which is why food stocks can be a great place to look.

Food stocks offer you the opportunity to get in on essential items. But not all foods stocks are alike. So today, these are the food stocks I would buy on the TSX today for long-term income.

Maple Leaf Foods

Maple Leaf Foods (TSX:MFI) is a strong option to consider right now, with a dividend yield at 3.38%, and shares only slightly higher than they were at the beginning of the year. The stock has gone up and down, most recently from earnings that show only mild improvements in the last quarter

Sales grew 1.1% year over year, with meat protein sales up 1.4% and plant protein sales up a whopping 61.3%. Capital expenditures came in at $50.5 million, and the expectations are strong for the rest of the year. It now expects neutral adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for plant protein. Further, meat protein should hit adjusted EBITDA between 14% and 16% in growth.

The company has also managed to reduce costs as well, but even so there is work to be done in terms of free cash flow. All in all, however, Maple Leaf stock looks like a great deal among TSX stocks on the market today. So certainly consider it while trading at just 0.62 times sales as of writing.

Saputo

Another fan favourite, Saputo (TSX:SAP) is another food stock I would consider on the TSX today. During its second quarter earnings last month, Saputo stock announced some positive news, making investors consider picking up the stock once more. Even with shares near 52-week lows.

Saputo stock earned $156 million during the quarter, up $145 million from 2022 levels. Revenue, however, was down to $4.3 billion from $4.5 billion the year before. Overall, sales were stable despite softer demand for dairy products. Going forward, the company expects higher price increases will yield better results, with near-term inflation remaining moderate.

Shares are now down 24% in the last year, making it a highly valued food stock right now. It offers a 2.82% dividend yield, and trades at 17.8 times earnings and 0.6 times sales. The future, however, could see this share price make a huge turn.

Metro

Finally, for future growth perhaps look for more diversification. That could certainly come from investing in Metro (TSX:MRU). Metro stock has seen a rough month as the company went through strikes and working for fair wages. Yet as the grocery retailer moves past these issues, Metro stock should recover once more.

Especially after strong earnings result. Fourth quarter results saw sales increase 14.4%, with net earnings up 31.7%. The labour conflict certainly hurt, with 27 Metro stores in the Greater Toronto Area affected. However, overall the year was strong, with a 9.7% increase in sales and net earnings up 19.9%.

So again, shares could be quite valuable after all these labour issues. You can therefore grab a higher 1.76% dividend yield as of writing, while it trades at 16.8 times earnings. Meanwhile, shares remain down 8% in the last month, providing a nice dip to hop in on.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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