Follow your stomach to invest: the food companies that will make you money

Some of us have been “fattening our curves” over the lockdown period and even many of us who have maintained our pre-COVID weight have changed spending habits around food and groceries.

This has had a big impact on a number of companies in the food sector, and – as some of them are listed on the ASX – it is possible to follow our stomachs investment dollars and take advantage of what have become major trends.

With restaurants, cafes and clubs closed for much of the last few months, people have been cooking at home or ordering take-away, and a look at the ASX shows some significant beneficiaries.

Domino’s Pizza may not be at the healthiest end of the eating spectrum, but during lockdown the company has seen a surge in demand.

The company had been doing well pre-COVID posting a profit increase of nearly 30 percent for the six months to December 30, 2019, due to the what the Domino’s CEO said was a consumer trend for “cocooning” at home, which has only accelerated recently.

Shares in Domino’s began the year at around $55 each, and then had a spike to $63 in February before the March slump hit the wider market.

If you had purchased Domino’s shares in late April, they would have been priced at $48 or so, while this week they are trading at $73, a rise of 52 percent in less than three months.

On a healthier note, meal kit provider Marley Spoon is the second largest provider in this growing segment, but is the only one to be ASX listed.

They also have Woolworths as a shareholder, which gives them an immediate channel to market.

Marley Spoon shares have been on a roller coaster ride since the float in 2018, when they were issued at $1.42 each.

The stock crashed in mid-March as the market went south and slumped as low as 23 cents, but since then it has all upwards and onwards with the shares now at around $2.10.

A third stock to consider is Metcash, which supplies supermarkets under the Independent Grocers Australia (IGA) banner and has a similar arrangement in hardware with Mitre 10.

While the share price of both Woolworths and Coles increased during the lockdowns, market analysts remain luke-warm on their shares due to their high cost base.

Metcash, however, is seen to be benefitting from a move back to smaller and more local stores.

The company reports its financial results for the 12 months to the end of April, and posted a 9.3 percent increase in food sales while supermarket sales surged 16.7 percent.

Metcash shares haven’t been as stellar as Marley Spoon, but anyone who purchased in May, when the price bottomed out at $2.32, would be pleased by this week’s price of $2.75.

All proof that investing is not only about following your instincts, but also following your stomach.