NEW YORK ( TheStreet) - After five years of a bullish stance on U.S. food manufacturing stocks, Citigroup(C) - Get Report analysts are taking a more cautious outlook on the sector for 2015.

"Critically, we see no broad-based evidence in our most recent food, retail scanner data that suggests any optimism, as U.S. food volumes remain in decline," the Jan. 12 report said. Of the 15 food stocks (packaged food and grain processors) that Citigroup covers, only eight remain at "buy."

"In short, we see the food sector facing significant headwinds including a 15-year high forward P/E valuation, ongoing volume headwinds, an onerous foreign exchange environment, and risk to organic growth estimates especially for food companies with exposure to Europe & Emerging Markets (EM)," the report said.

"To be fair, we do expect some positive factors to partially offset the aforementioned headwinds including: improving U.S. GDP growth and the expectation that lower oil prices will positively affect both the consumer's spending power and by lowering manufacturing costs at the food manufacturers-which clearly tilts our view to the more U.S.-centric food companies," Citigroup added. "Still, we see the positives as priced in but with little evidence of their effect within our specific sector of coverage - food."

TheStreet paired the Citigroup's investment perspectives with ratings from TheStreet Ratings, its proprietary research tool, to give an added perspective on the stock picks.

TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 30 major data points, TheStreet Ratings uses a quantitative approach to rating stocks. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

From lowest rated to highest, here are Citi's best and worst food manufacturing stocks for 2015.

9. McCormick & Co. (MKC) - Get Report

McCormick & Company, Incorporated manufactures, markets, and distributes spices, seasoning mixes, condiments, and other flavorful products to retail outlets, food manufacturers, and foodservice businesses. It operates in two segments, Consumer and Industrial.

Citigroup: from Neutral to Sell, $70 TP from $74
Citigroup said: McCormick sports one of the highest valuations in U.S. food yet has been unable to deliver on its long-term growth algorithm over the past two years. In 2015, we see more of the same as U.S. pricing pressures and FX headwinds continue to constrain growth. We recognize that this is one of the premier assets in U.S. Food, but are compelled to recommend the sell rating given the lofty valuation expectations on this business. We are cutting our 4Q14 & 2015 estimates on MKC to $1.13 (-3c) and $3.55 (-5c) and are below the street by -2c and -5c, respectively.

TheStreet Ratings: Buy, A
TheStreet Ratings said:"We rate MCCORMICK & CO INC (MKC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, expanding profit margins, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

You can view the full analysis from the report here: MKC Ratings Report

8. Kraft (KRFT)

Kraft Foods Group, Inc. operates as a consumer packaged food and beverage company in North America and worldwide. It operates through Beverages, Cheese, Refrigerated Meals, Meals & Desserts, Enhancers & Snack Nuts, Canada, and Other Businesses segments.

Citigroup: from Neutral to Sell, $61 TP
Citigroup said: Kraft has missed revenue and operating profit expectations all year in 2014, replaced its CEO (who we liked), and yet all its stock has done is go up. At 20x 2014E EPS, we see the stock as overvalued, and see it as the beneficiary of investors who have sought high dividend yields (as U.S. Treasuries have declined), and limited foreign exposure. Thus, there is more going on with Kraft's stock than just its own fundamentals, which continue to look challenged to us - Kraft is losing market share in 70% of its businesses. We acknowledge there is event risk on this sell rated call, but fail to see the transaction that makes sense on a long term basis, eg. we are not fans of an Oscar Mayer divestiture and, separately, see the price as too rich for a buyer like 3G/Heinz.

TheStreet Ratings: Buy, B-
TheStreet Ratings said: "We rate KRAFT FOODS GROUP INC (KRFT) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

You can view the full analysis from the report here: KRFT Ratings Report

7. Campbell Soup Co. (CPB) - Get Report

Campbell Soup Company, together with its subsidiaries, manufactures and markets convenience food products. It operates through U.S. Simple Meals; Global Baking and Snacking; International Simple Meals and Beverages; U.S. Beverages; and Bolthouse and Foodservice segments.

Citigroup: from Neutral to Sell, $42 TP from $44
Citigroup said: Campbell's continues to execute its portfolio transition to areas outside of soup that have better growth - Bolthouse juices, Plum Organic baby food, International biscuit growth-which we are a big fan of. However, these changes will take a long time to come to fruition such that the overall growth trajectory of the company is enhanced. In the meantime, we see the valuation stretched too far with a strong likelihood that EPS estimates in the current year are too high as our data suggests another disappointing soup season. We are cutting our F2Q15 and full year F2015 estimate to $0.67 (-2c) and $2.42 (-2c), and are below the street by -2c and -4c, respectively.

TheStreet Ratings: Buy, B
TheStreet Ratings said: "We rate CAMPBELL SOUP CO (CPB) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

You can view the full analysis from the report here: CPB Ratings Report

6. ConAgra Foods (CAG) - Get Report

ConAgra Foods, Inc. operates as a food company primarily in North America. The company operates through three segments: Consumer Foods, Commercial Foods, and Private Brands

Citigroup: from Buy to Neutral, $39 TP
Citigroup said: The stock has run up significantly and now is close to our target. In addition, recent Nielsen data showed marked deterioration from prior months. Finally, and most troubling were comments management made on its December earnings call indicating that it was having trouble reestablishing its private label business with certain retailers.

TheStreet Ratings: Buy, B-
TheStreet Ratings said: "We rate CONAGRA FOODS INC (CAG) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strongest point has been its a solid financial position based on a variety of debt and liquidity measures that we have looked at. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

You can view the full analysis from the report here: CAG Ratings Report

5. Mondelez International (MDLZ) - Get Report

Mondelez International, Inc., through its subsidiaries, manufactures and markets snack food and beverage products worldwide.

Citigroup: from Buy to Neutral, $41 TP from $43
Citigroup said: Heavy exposure to international markets poses two significant headwinds into 2015 - slower-than-expected organic revenue growth and significant foreign exchange headwinds. Mondelez European chocolate business continues to struggle to implement pricing increases as competitors seek to take advantage. We are cutting our 2015 estimate on Mondelez to $1.75 (-3c), and are below the street by -11c.

TheStreet Ratings: Buy, B-
TheStreet Ratings said: "We rate MONDELEZ INTERNATIONAL INC (MDLZ) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its expanding profit margins, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

You can view the full analysis from the report here: MDLZ Ratings Report

4. Kellogg (K) - Get Report

Kellogg Company, together with its subsidiaries, manufactures and markets ready-to-eat cereal and convenience food products primarily in the United States and the United Kingdom. The company operates through U.S. Morning Foods, U.S. Snacks, U.S. Specialty, North America Other, Europe, Latin America, and Asia Pacific segments. Its principal products include ready-to-eat cereals and convenience foods, such as cookies, crackers, savory snacks, frozen foods, toaster pastries, cereal bars, fruit-flavored snacks, frozen waffles, and veggie foods, as well as health and wellness business bars, and beverages. The company markets cereal products under the Kellogg's name; and cookies, crackers, crisps, and other convenience foods under various brands, such as Kellogg's, Keebler, Cheez-It, Murray, Austin, and Famous Amos. The Company sells its products for grocery trade and to supermarkets directly, as well as through brokers and distributors. The company was founded in 1906 and is headquartered in Battle Creek, Michigan.

Citigroup: from Buy to Neutral, $71 TP from $73
Citigroup said: We downgrade Kellogg following its 10% rise in 2014, but with fundamentals still very weak. Even in the most recent US and European Nielsen cereal data, Kellogg has not been able to stem significant cereal volume declines. The company faces further headwinds in 2015 from FX, higher incentive compensation, which should be partially offset by savings from the company's Project K restructuring program. We believe that until Kellogg can stabilize its cereal franchise, investment dollars will continue to pour into this critical segment of the company and thus constrain EPS growth. We are cutting our 2015 estimate on Kellogg to $4.10 (-15c).

TheStreet Ratings: Buy, A-
TheStreet Ratings said: "We rate KELLOGG CO (K) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its notable return on equity, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

You can view the full analysis from the report here: K Ratings Report

3. Mead Johnson Nutrition (MJN)

Mead Johnson Nutrition Company manufactures, distributes, and sells infant formulas, children's nutrition, and other nutritional products.

Citigroup: Buy, $119 TP
Citigroup said: We expect Mead Johnson to benefit from a massive decline in dairy, as non-fat dry milk prices have fallen, suggesting a full-year 2015 drop in its largest input of -34%. If Mead can maintain prices (which they say the will), Mead stands to see +65c in EPS benefits in 2015 from lower dairy alone. Growth will be tempered by FX headwinds and a slow-down in Chinese infant formula category sales, but net-net, we expect 2015 EPS growth of 13%, with more upside potential than down side. Organic revenue growth at Mead is expected to be 8%, with a significant contribution from a revitalized North American market where births are on the rise and Mead has launched a significant effort to build the toddler formula category.

TheStreet Ratings: Buy, B+
TheStreet Ratings said: "We rate MEAD JOHNSON NUTRITION CO (MJN) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, good cash flow from operations, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

You can view the full analysis from the report here: MJN Ratings Report

2. TreeHouse Foods (THS) - Get Report

TreeHouse Foods, Inc. operates as a food manufacturer in the United States and Canada. It operates in North American Retail Grocery, Food Away From Home, and Industrial and Export segments.

Citigroup: Buy, $100 TP
Citigroup said: We expect TreeHouse to grow its K-cup coffee business by 20% in 2015, realize 2015 EPS accretion of $0.25-$0.27 from recent acquisitions, benefit from low commodity inflation, and an improving U.S. consumer. We see 2015 EPS growing 16% with 6 percentage point (pp) contribution from Kcups, 7pp from acquisitions, and the remainder from core ops growth. Further upside is possible as TreeHouse remains on the hunt for further accretive M&A transactions in its long-running effort to roll-up the U.S. private label industry.

TheStreet Ratings: Buy, B
TheStreet Ratings said: "We rate TREEHOUSE FOODS INC (THS) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

You can view the full analysis from the report here: THS Ratings Report

1. Hershey Co. (HSY) - Get Report

The Hershey Company, together with its subsidiaries, manufactures, markets, distributes, and sells chocolate and sugar confectionery products, pantry items, and gum and mint refreshment products.

Citigroup: Buy, $123 TP
Citigroup said: We expect Hershey to deliver top tier EPS growth of 14% in 2015 driven by the benefits of higher chocolate pricing that was announced in July 2014. We expect pricing to drive gross margin increases of 60 bps, but see the risk heavily tilted toward the upside given the significant decline in dairy prices. Further, we expect new products to be more impactful in 2015 driven by the launch of Brookside Crunchy Clusters, Kit Kat White Minis, Hershey's Caramels, Ice Breakers Cool Blasts Chews, Reese's Spreads Snacksters Graham Dippers.

TheStreet Ratings: Buy, A
TheStreet Ratings said: "We rate HERSHEY CO (HSY) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

You can view the full analysis from the report here: HSY Ratings Report

- Written by Laurie Kulikowski in New York.

Follow @LKulikowski