Food and staples retailing is one of the global retail industry’s largest and most fragmented sectors. According to a report by the Retail Council of Canada, the retail sector in Canada is valued at $199 billion and employs 1.7 million people. The food and staples retailing segment alone accounts for $75 billion. New technologies make their presence felt in almost every sector, including the retail industry. From virtual reality to artificial intelligence, nearly every new technology gives customers a more memorable and personalized shopping experience. This article presents our top recommendations for investing in Food & Staples Retailing stocks in 2022.
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BJ’s Wholesale Club Holdings (BJ)
BJ’s Wholesale Club Holdings is one of the US’s largest food and staples retailers. It offers a wide range of products and services, such as gas, groceries, health and beauty, electronics, apparel, and household products. BJ’s Wholesale Club caters to the needs of its members by providing them with savings of up to 25% on everyday items. BJ’s Wholesale Club currently operates more than 190 warehouse clubs, gas stations, and grocery stores in the US. Its warehouses are typically located in densely populated areas such as the East Coast, Southern California, and the Pacific Northwest. BJ’s Wholesale Club Holdings has shown strong growth in its earnings. The company’s earnings have grown by a CAGR of 11% over the last three years. The company’s net sales have also risen at a healthy pace of 8% CAGR over the same period. BJ’s Wholesale Club’s balance sheet is also strong, with a low debt-to-equity ratio.
Costco Wholesale (COST)
Costco Wholesale is one of the largest membership-based wholesale retailers in the world. The company’s business model involves selling a limited range of products in bulk quantities directly to its members. Costco Wholesale is well known for selling groceries, apparel and accessories, and healthcare products at meager prices. The company currently operates more than 700 warehouses in the US and more than 100 warehouses in other parts of the world. Costco’s warehouses are large and modern, with a standard floor space of about 88,000 square feet. The company’s warehouses are designed to store and sell large volumes of goods and can hold up to US$25 billion in merchandise. Most of Costco Wholesale’s operations are in the US. However, the company is slowly expanding its operations to other parts of the world, including Canada, Mexico, Australia, and Britain.
Casey’s General Stores (CASY)
Casey’s General Stores is a Midwestern-based food and staples retailer. It is one of the largest convenience store operators in the US by several stores. Casey’s General Stores operates more than 2,200 convenience stores throughout 16 states. The company’s stores focus on everyday items such as beverages, snacks, fuel, tobacco products, and general merchandise. The company’s general merchandise store is the largest non-department store in the US. Casey’s General Stores is one of the biggest wholesale grocers in the US, selling groceries to other chains and independent grocery stores. The company’s strategy of diversifying its product mix will likely drive higher sales and earnings. The company’s profits have grown by a CAGR of 8% over the last three years. Its net sales have increased at a CAGR of 7% over the same period.
The Chefs’ Warehouse (CHEF)
The Chefs’ Warehouse is a food and staples retailer in the US. The company’s primary business is to sell a wide range of kitchen and catering supplies, including chef uniforms and shoes, other apparel, kitchen utensils and appliances, and food products. The Chefs’ Warehouse sells its products through its brick-and-mortar stores and online. The company currently operates 37 retail stores, including five stores in Canada. The Chefs’ Warehouse also sells its products through online stores like Amazon and Shopify. The Chefs’ Warehouse primarily focuses on kitchen supplies and sells other general merchandise. The Chefs’ Warehouse has grown its earnings by a CAGR of 14% over the last three years. Its net sales have risen at a CAGR of 14% over the same period. The Chefs’ Warehouse has a healthy balance sheet with low debt and a high cash-to-debt ratio.
Conclusion
This article discussed the investment outlook for food and staples retailing in 2022. We also discussed the top stocks in this sector and their expected returns. Investors can consider investing in any of these stocks to reap higher returns from this sector in the coming years.
