We recently published a list of 10 High Growth Food Stocks to Buy. In this article, we are going to take a look at where Starbucks Corporation (NASDAQ:SBUX) stands against other high growth food stocks to buy.

The global food industry has always stimulated economic growth, innovation, and a shift in consumer trends. It is projected to reach $2.2 trillion by 2032 from its market size of $1.64 trillion in 2022, at a compound annual growth rate (CAGR) of 2.99%, according to Market Research Future. Despite food being a necessity, the business dynamics within the food industry are very complex and companies must be adaptable as they navigate the complexities of rising production costs, changing consumer preferences, and global supply chain disruptions.

Within the industry, inflation remains a key topic. While it was soaring in 2022, food prices have since declined. However, they are on the rise again, causing financial strain on both consumers and businesses. As reported by the U.S. Department of Agriculture (USDA) in December 2024, grocery prices went up by 1.8% compared to the previous year, and food-away-from-home costs increased to 3.6%. Especially staple food items, including eggs and beef, had a sharp rise due to the avian flu wave and the supply limitations. These price fluctuations create a challenge for food companies, which must adjust their pricing strategies without sacrificing demand or alienating customers.

On the other hand, consumer behavior is also changing, putting forth factors like health, sustainability, and convenience. Thus, specialty stores have seen an increase in the demand for fresh and raw food. At the same time, budget-conscious shoppers are gravitating toward discount retailers, highlighting the growing importance of affordability. Thus, food companies must meet diverse consumer needs driven by the dual trend of seeking premium and value-oriented products.

Furthermore, technological breakthroughs are also contributing to the industry’s transformation. Supply chain optimization, waste reduction, and increased production efficiency are being greatly aided by automation and artificial intelligence (AI). Moreover, robotics is deployed in food processing to increase production and efficiency, while AI-driven demand forecasting helps avoid inventory problems. Consumers’ growing need for convenience is being met by the usage of digital ordering and delivery platforms, which opens new avenues for revenue growth. By adopting these technologies, companies are keen to improve operations and take advantage of growth opportunities in a market that is constantly evolving.

Even with economic instability, the future of the food industry is promising, driven by global population growth, urbanization, and the expanding middle class in emerging markets. In addition, new investment opportunities are being created by the popularity of plant-based meals and alternative proteins. Thus, big industry players are prioritizing the integration of technology, sustainability, and innovation in their business model to capitalize on future growth potential.

Many stocks stand out for their capacity to capitalize on this growth potential.

Methodology

To curate our list of the 10 High Growth Food Stocks to Buy, we used Finviz stock screener to gather stocks within the food sector with a strong market capitalization. We then narrowed the list based on each company’s five-year compound annual growth rate (CAGR) to identify those demonstrating consistent revenue expansion.

Furthermore, we also considered the number of hedge funds holding stakes in each stock, using data from Insider Monkey’s hedge fund database, which tracks the activity of 1,009 hedge funds.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

A barista pouring freshly brewed coffee from an espresso machine to a cup in a bustling cafe.

Starbucks Corporation (NASDAQ:SBUX)

Number of Hedge Fund Holders: 70

5-year Revenue CAGR: 11.37%

Starbucks Corporation (NASDAQ:SBUX) continues to expand its presence worldwide and drive long-term growth through its strategic initiatives. The company is a leading specialty coffee roaster, marketer, and retailer, with a diverse brand portfolio that includes Starbucks Coffee, Teavana, Seattle’s Best Coffee, Ethos, and Starbucks Reserve.

Starbucks Corporation (NASDAQ:SBUX) announced its “Back to Starbucks” initiative during its most recent earnings call, with the goal of revitalizing its reputation as a premier coffeehouse. For the quarter ended December 29, 2024, the company reported $9.4 billion in total revenue, while global comparable store sales went down by 4%. This decline in same-store sales was primarily due to lower foot traffic, particularly in China, where an uncertain macroeconomic climate and increased competition hampered performance.

To address these issues, Starbucks Corporation (NASDAQ:SBUX) is aggressively optimizing its store portfolio and streamlining operations. Additionally, the company is simplifying its menu and refining its pricing strategies. Starbucks has eliminated the extra charge for non-dairy milk customizations in an effort to increase customer satisfaction. Furthermore, the brand is attempting to reintroduce itself through broader marketing campaigns rather than relying solely on discount-based promotions.

Furthermore, Starbucks Corporation (NASDAQ:SBUX) is expanding significantly in the Middle East, with plans to open 500 new locations over the next five years. However, geopolitical tensions in the region, particularly the war in Gaza, have had an impact on sales, with boycotts resulting in revenue decline. In China, the company is looking into strategic partnerships to help it sustain long-term growth in an increasingly competitive consumer market.

Despite these short-term challenges, Starbucks Corporation (NASDAQ:SBUX) remains resilient, with 70 hedge funds holding stakes in the company, as of Q4 2024, indicating high investor confidence. Moreover, Starbucks’ stock price has risen 21.38% in the last six months, partially supported by investors’ confidence in the company’s turnaround strategy. Thus, it gets a place in our list of the 10 High Growth Food Stocks to Buy.

Overall, SBUX ranks 6th on our list of high growth food stocks to buy. While we acknowledge the potential of SBUX as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SBUX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

 

Disclosure: None. This article is originally published at Insider Monkey.