One trend has been quite apparent since the pandemic began - Americans are stuffing their faces. For much of quarantine, this fact has been cited as a big moneymaking opportunity for investors. And the statistics are so satisfying. According to the Frito-Lay U.S. Snack Index, 66% of consumers now have more snacks in their homes than they did prior to the pandemic. And that's because 63% of Americans are snacking to break up the monotony of staying home. Plus, 76% of people are using snacks as a way to treat themselves. Over the many months of quarantine, I myself have made scores of simple snacks - like puffed rice cereal treats. And I'd wager that I've made and consumed more of these snacks in the past 10 months than I have in the past 10 years. On the surface, these numbers should offer the sweet smell of success for snack food giants such as Conagra Brands (NYSE: CAG), General Mills (NYSE: GIS), Kellogg (NYSE: K), Kraft Heinz (Nasdaq: KHC), Mondelēz International (Nasdaq: MDLZ) and PepsiCo (Nasdaq: PEP). And financially, they have. But in actuality, their stock performances have stunk. Run Over by PelotonInvestors always scramble to cram themselves into the next big thing. And in this rush, some great companies can be left behind. Over the past year, Conagra, General Mills, Kellogg, Kraft Heinz, Mondelēz and PepsiCo have posted tepid returns. In fact, the largest gains of the bunch are from General Mills and Kraft Heinz. But both are still quite meager, below 9%. Compared with the rest of the stay-at-home economy stocks, that's a lackluster performance. And it's way behind the almost 45% gain on the Nasdaq and the 18% return on the S&P 500 during the same stretch. The only positive takeaway is that the best performers have essentially matched the return of the Dow Jones Industrial Average over the past year. So what gives? If Americans are packing away more snacks, why aren't these junk food maker shares soaring higher than Peloton (Nasdaq: PTON)? |
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