Grain-Based Foods Share index lagging, but not by much
Feb. 28, 2017
Amid heated, divisive rhetoric saturating the first weeks of the Donald J. Trump administration, the U.S. stock market has stood as a uniquely powerful and stable indicator of optimism. Since Mr. Trump was elected, the S.&P.500 index has surged more than 12%.
While failing to match this performance, the Grain-Based Foods Share index, as compiled by Milling & Baking News, has generated impressive results, too. The index has jumped 9% since the beginning of November, compared with a 5% gain by the Vanguard consumer staples exchange traded fund. While the Grain-Based Foods Share index has been holding its own by numerous measures, a closer look suggests an iffier situation for the industry. Of the 27 stocks included in the index since the beginning of November, 20 failed to equal or eclipse the S.&P.500 over the same period. The aggregate 9% advance was sustained by particular strength in a couple handfuls of grain-based stocks – Bunge Ltd.; Flowers Foods, Inc.; Hostess Brands, Inc.; MGP Ingredients Inc.; Panera Bread Co.; Seaboard Corp.; and Snyder’s-Lance Inc. Shares in six of the companies in the index have seen share-price declines since the election.
At one level, the lagging performance of grain-based foods shares is anything but surprising. Given that the index had outperformed the market for eight consecutive years, through 2016, a period of underperformance, perhaps lengthy, was to be expected. Whether food industry executives gain their footing during this period and share prices outperform, the sector seems poised for a strong year.