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Packaged Food Stocks: Year in Review

Stocks in this article: GSPC GMCR DMND CAG HRL BNNY CPB MDLZ HAIN KRFT K

I grant that the process has been slower than investors would like. But as I've said recently, this is still a brand with strong nutritional value. I place ConAgra at the top of my list of food outperformers in 2014. By contrast, with its year-to-date gains of 44% and 33%, respectively, I still rank both Hormel Foods (HRL) and Annie's (BNNY) as too expensive for my taste.

Given their valuations relative to Campbell Soup (CPB) and Mondelez (MDLZ), the Street is placing some high bets on these companies, especially where the margin leverage and profits do not justify the optimism.

I don't deny that Annie's management has done exactly what the Street has demanded, which is to grow the top line. But I can't overlook that the company is relatively young with limited history of execution. In that regard, I believe Hain Celestial (HAIN), which traded at half of Annie's forward P/E, is the better buy for 2014, especially since you can get 7% more in quarterly revenue growth.

[Read: So Your Credit Card Was Hacked, Now What?]

All told, there isn't a perfect formula to timing the entry and exit points in these stocks. But I have noticed over the years that depressed companies or those that have fallen out of favor with the Street can easily rebound, as both Green Mountain and Diamond Foods have shown. But that's not always a guarantee.

On the flipside, there are companies like Kraft's (KRFT) 20% gains, which I love, and Kellogg (K), with gains of just 11%, that can never regain their sex appeal. But their strong dividends and safety quality makes them hard stocks to pass up, regardless of economic environment. Suffice it to say, 2014 will present a nice buffet of food options to choose from. Just be sure to weigh them properly.

At the time of publication, the author held no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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