The Eat-At-Home Trend Is Here to Stay, Analyst Says. 7 Stocks That Benefit. -- Barrons.com
By Teresa Rivas
Call it the summer of soup: With plenty of reasons to stay at home, Americans will continue to cook more for themselves, argues Piper Jaffray. That is good news for food companies from Campbell Soup to General Mills.
Analyst Michael Lavery takes a look at the packaged-food space following his firm's latest coronavirus-related survey, which "suggests a sustainable lift for food-at-home sales of perhaps 15% or more." Two-thirds of respondents said in June that they are likely to eat more at home than they did before, even after Covid-19, marking only a very small decline from April and May.
Moreover, those who do plan to cook expect to eat an average of four more meals at home. More than half said that they are either unlikely or not sure whether they will return to newly reopened restaurants, an increase from readings in both April and May.
Of course, people can still get takeout from restaurants, but overall the results make Lavery more cautious on restaurants. By contrast, he writes that meal-oriented packaged-food companies look likely to continue to reap the benefits of at-home eating. He highlights General Mills (GIS), B&G Foods (BGS), and Campbell Soup (CPB). He sees a smaller benefit for snacking-oriented companies with little or modest food-service exposure, like Hain Celestial (HAIN), Kellogg (K), Mondelez International (MDLZ), and Hershey (HSY).
Another boon for General Mills could be pet ownership. Some 14% of respondents said they were new pet owners since the start of the pandemic, and owners are more likely than animal shelters to spend on premium products, like General Mills' Blue Buffalo brand pet food.
Barron's has argued recently that consumers will continue to eat at home -- an opinion some analysts share -- as new habits form and Covid-19 cases force some states to halt or rollback reopening plans. (That's another knock against restaurants.)