We recently published a list of The 9 Best Pizza Stocks to Buy Now. In this article, we take a look at how Nomad Foods Limited (NYSE:NOMD) compares to other pizza stocks.
How is the pizza market doing?
Pizza originated in Italy and has since spread like wildfire across the globe. It has always been the first choice of consumers and hence its market is growing till date. As reported in one of our articles on the best pizza stocks to buy, the pizza market is expected to register a compound annual growth rate (CAGR) of 4.45% during the period 2024-2032, growing from $148.6 billion in 2023 to $222.5 billion in 2032. The frozen pizza segment is also expected to grow during the period 2023-2028, reaching a market value of $5.96 billion, registering a compound annual growth rate (CAGR) of 4.96%.
The popularity of pizza can be gauged by statistics showing that there are 245,000 pizzerias worldwide, with about 77,000 of them in the US. The US itself recorded record pizza sales of $46.9 billion in 2022, thanks to the opening of over 7,000 outlets in the eight years to 2022. This underlines the fact that the largest pizza chains in the world are based in the US. Pizza Hut, one of the largest pizza brands in the world, is the oldest, having been founded in Kansas, USA, back in 1958.
What’s going on in the industry?
In the frozen pizza segment, meat toppings dominate the market with a 56% share of sales, while vegetable toppings have a 26% share. In contrast, cheese toppings also compete well with a 14% share, it is reported media.Market.us. DiGiorno, Red Baron and Totino’s Party Pizza are the top frozen pizza brands with the greatest brand recognition.
Recent trends in the pizza market include the increasing demand for vegan pizzas (frozen or otherwise); this evolving pizza market is in full swing as new demands for cheese substitutes, all kinds of pepperoni, Mexican meats like birria and chorizo, and new toppings continue to emerge.
What is new in the industry is the rapidly increasing use of technology by operators. A survey shows that 748 pizza makers in the US consider online ordering to be the new preferred way of consuming pizza and that 78.21% of manufacturers are investing heavily to strengthen their brand presence online. Optimism is also high among pizza makers, as most of them believe that sales will grow over the next twelve months.
So, the pizza market will undoubtedly grow indefinitely (or at least it should), and to capitalize on that growth, you need to know which pizza stocks are the best to buy. So let’s get to our list of the 9 best pizza stocks to buy now.
methodology
To compile our list of the 9 best pizza stocks to buy now, we compiled a list of all the companies that have a significant presence in the pizza industry and the related cheese and flour industries. Then, we further narrowed it down based on various metrics such as institutional ownership, the number of analysts covering the stock, and the overall financial health of each stock. We ranked the top remaining companies by the number of hedge funds that had stakes in them as of December 31, 2018. 2nd quarter 2024.
At Insider Monkey, we are obsessed with the stocks that hedge funds invest in. The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (Further details can be found here).
A close up of fresh frozen vegetables and fish products ready for packing.
Nomad Foods Limited (NYSE:NOMD)
Number of hedge fund owners: 30
Upside potential: 32.60%
Nomad Foods Limited (NYSE:NOMD) is a British company specializing in the frozen food market. The company owns Goodfellas Pizza, which operates in the United Kingdom and Ireland.
The company reported a 1.1% increase in net sales in the second quarter of 2024, reaching $830.7 million, driven by a 1.6% increase in sales volume. Gross margin was 30.9%, up 270 basis points. One of the reasons for the improvement in gross margin was a favorable product mix and higher supply chain productivity. The company also increased its advertising and promotion spending by 30% year-on-year, which it believes will strengthen the brand’s market presence and product visibility.
Nomad Foods Limited (NYSE:NOMD) also wants to expand its product portfolio, particularly in the chicken segment, through the launch of the Birds Eye and Findus brands and is aiming to expand into the German and Italian markets.
The company has reiterated its full-year guidance, expecting net sales to grow by 3 to 4 percent and adjusted EBITDA to grow by 4 to 6 percent. Nomad Foods also believes that the economic easing in Europe will also boost business, particularly in the German and Italian markets, where the company is just gaining a foothold.
For example, 30 hedge funds are bullish on the stock starting from the second quarter of 2024. This is because the food market is expected to grow at a compound annual growth rate of 4.8%, increasing from $297.5 billion in 2023 to $310.8 billion in 2032, and because of the company’s operational growth over the years. In addition, eight analysts forecast the stock to grow by 32.6%, with revenue increasing to $1.78 billion in 2024 and $1.95 billion in 2025.
Total NOMD 4th place on our list of the best pizza stocks to buy. While we recognize NOMD’s potential as an investment, we believe some highly undervalued AI stocks promise higher returns, and in a shorter time frame. If you’re looking for a highly undervalued AI stock that shows more promise than NOMD but trades at less than 5 times earnings, read our report on the cheapest AI stock.
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Disclosure: None. This article was originally published on Insider Monkey.
