JP Morgan has initiated coverage of U.S. food producers, retailers, and agricultural companies, highlighting McCormick (NYSE:MKC), Albertsons (NYSE:ACI), Hormel (NYSE:HRL), and Smucker (NYSE:SJM) as top picks, while remaining cautious on Beyond Meat (NASDAQ:BYND) and General Mills (NYSE:GIS).
The bank said it now prefers food retailers over producers, expecting supermarkets to benefit from persistent inflation and consumer shifts toward higher-margin, healthier products.
Food producers are expected to face slower growth, potential market-share losses, and cost pressures, although much of this risk is already reflected in current stock prices.
For individual ratings, JP Morgan assigned Overweight to McCormick, Albertsons, Hormel, and Smucker, while maintaining Underweight for Beyond Meat and General Mills.
McCormick is viewed as attractive following a recent pullback, and Albertsons is expected to boost earnings through operational improvements after its failed merger with Kroger (NYSE:KR).
Hormel stands out due to a rebound in turkey prices and improving margins at its Planters nuts brand, while Smucker is expected to grow sales with its Uncrustables snack line and the gradual recovery of the pet food segment.
Analysts remain cautious on Beyond Meat given declining demand and high cash burn, and see limited upside in General Mills due to weak sales trends and a stretched valuation versus peers.
Regarding agricultural product companies, JP Morgan notes that the outlook remains uncertain and heavily dependent on U.S. biofuel policy, which is still under review. Overall, the bank sees food retailers as best positioned in the current environment, while food producers face the toughest conditions.
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