Food stocks really came into their own last year as the coronavirus pandemic had everyone laser focused on what it meant to buy food where. Yet not all companies fared equally. 

Restaurants, for example, were crushed by the bans on indoor seating, though those with developed off-premise operations like Darden Restaurants(NYSE:DRI) Olive Garden chain came out relatively better than those that had to build one on the fly.

Similarly, supermarkets saw increased sales from consumers choosing to cook at home more, but Walmart (NYSE:WMT), with its robust online grocery business, generated far more sales than other chains whose e-commerce operations were less fully developed.

Below are two food stocks to buy in January that still provide investors with unique opportunities for further gains.

Bowl of soup

Have your portfolio chow down on the comfort foods these two stocks provide. Image source: Getty Images.

Prepared for the worst

Packaged food giant Conagra Brands (NYSE:CAG) was one of those companies positioned to capitalize on limited out of home dining opportunities. The owner of such staples of kitchen refrigerators everywhere, including Birds Eye, Marie Callender’s, Banquet, and Healthy Choice, is in the midst of a massive sales expansion as not everyone eating at home is looking for fresh vegetables and produce.

Quick, easy, and healthy prepared meals allowed Conagra to enjoy a 19% surge in fiscal 2021 first quarter sales for refrigerated and frozen foods this past October. It also saw a new 21% jump in organic net sales in grocery and snacks and a 13% gain in international sales.

That’s not to say it wasn’t hurt by the pandemic at all, as its foodservice saw organic sales tumble 20%, though fortunately it was one of its smallest divisions, so the impact was minimal.

Conagra, though, has been preparing for an acceleration in growth for the past five years through its The Conagra Way strategic plan, which president and CEO Sean Connolly said “positioned us very well to capture the benefits of the recent consumer behavior shifts, many of which we believe will continue well into the future.”

Its focus on innovation, such as the launch of its Gardein brand of plant-based burgers, should help it continue exceeding expectations. At 14 times next year’s earnings estimates, and 16 times the free cash flow it produces, Conagra Brands is positioned to reap a windfall even as the worst of the pandemic fades in the rearview mirror.

Anticipating a new growth spurt

Kraft Heinz (NASDAQ:KHC) is another packaged foods company that is both attractively valued and positioned for the stay-at-home environment that seems like it will be with us for the foreseeable future.

Online grocery sales, which were originally forecast to account for 4.3% of all grocery purchases in 2020, actually accounted for over 10% of the total, and are expected to exceed one-fifth of all sales by 2025. It will likely be branded packaged goods like those from Kraft Heinz that have the best shot at gaining more customers looking for familiar and comforting condiments, sauces, snack foods, and beverages.

Also trading at 14 times earnings estimates, but 18 times free cash flow, Kraft Heinz offers a steady, predictable business that attracted the notice of Warren Buffett. His Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) subsequently took a better than 26% stake in Kraft Heinz.

The merger of Kraft and Heinz did take a toll on the business, sapping a good portion of the potential the company would otherwise offer. But the predictable nature of its business, which now has a turnaround plan in place that it’s acting on — coupled with a dividend that currently yields 4.6% annually — makes it attractive for retail investors as well.

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