Investors lose their appetite for food stocks on Trump's pick to lead HHS
Nov. 15, 2024 1:44 PM ET
By: Amy Thielen, SA News Edito
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President-elect Trump’s choice for the top job at Health and Human Services might “Make America Healthy Again” but is sending shockwaves through the food industry as Robert F. Kennedy’s aversion to overly processed food and sugary snacks is sending shares in the sector sharply lower.
“For too long, Americans have been crushed by the industrial food complex and drug companies who have engaged in deception, misinformation, and disinformation when it comes to public health,” Kennedy said following his nomination, adding that as head of Health and Human Services (“HHS”) he will ensure that “everybody will be protected from harmful chemicals, pollutants, pesticides, pharmaceutical products, and food additives that have contributed to the overwhelming health crisis in this country.”
His nomination is putting companies whose profits rely heavily on processed meats, high sugar or salt contents, and high levels of preservatives on notice for increased regulation.
Kennedy’s mandates could include making certain food dyes and additives that are already banned overseas illegal in the U.S., removing fluoride from drinking water, and eliminating over-processed foods from school lunches. Kennedy points to the stark contrast between soaring U.S. health care costs and Americans’ declining life expectancy a compelling reason to challenge the “corrupt and bloated” food industry.
Ultra-processed food has become synonymous with the American diet as more than half of the calories Americans consume are from foods that contain a high content of sugar, salt, oils, fats, and other additives. Hormel Foods Corp ( HRL) and its stable of products that include predominately processed meats (Spam, Dinty Moore, Hormel Pepperoni), pre-packaged Asian food, and Jennie-O deli meats will almost certainly receive increased scrutiny from an RFK-led HHS.
Conagra (NYSE: CAG) brands include high-sodium offerings like Slim Jim, Orville Redenbacher’s popcorn and Banquet prepared meals (remember Salisbury steaks?), Marie Callender’s frozen dinners, Duke’s smoked meats, and Birds Eye frozen vegetables, another potential target under a new HHS.
And for sugar, it’s hard to find something that doesn’t contain high levels of sugar among J.M Smucker’s ( SJM) offerings, including Uncrustables, JIF (which now has a peanut butter and chocolate combo), Hostess cakes, and of course, namesake jams and jellies.
Wall Street’s reaction might be overdone (most stocks mentioned are down ~3%) but on Friday there are more 52-week lows in the processed food sector than there are 52-week highs including a new 52-week low for B&G Foods ( BGS), Conagra Brands ( CAG), Celsius ( CELH), Hershey ( HSY), Kraft Heinz ( KHC), Coca Cola Femsa ( KOF), and Mondelez ( MDLZ). The Invesco Food & Beverage ETF ( PBJ) is lower for a fifth consecutive day, down 2.6% from last Friday's close. |
