The recession will hurt the demand for non-essential goods. Food is not one of them. Investors should add food and food services companies to their watch list. There are three to consider: Mondelez, Domino's Pizza, and Chipotle.
Mondelez (MDLZ) is trading near its 52-week high. It posted strong Q3 earnings because consumers want its biscuits and chocolate products. Look for Mondelez to raise its EPS growth forecast for this year. In 2023, it will benefit from easing supply chain problems and product price hikes.
Domino’s Pizza (DPZ) is worth the premium. It posted revenue growing by 7.2% to $1.07 billion. Despite inflation, the company could increase pizza prices. Customers are not demanding fewer pizzas. On the delivery side, Domino’s may adjust its prices higher without hurting demand. Customers see the strong relative value that the company offers.
Chipotle Mexican Grill (CMG) is a popular company. Its revenue grew by 12.8% Y/Y to $2.2 billion. Comparable restaurant sales gained 7.6%. Chipotle will add between 235 to 250 new restaurants. This will drive its revenue growth through 2023. The restaurant firm could cut its food portion and raise prices, and customers would still come back. Investors should expect Chipotle’s management to continue its good execution.
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