I'm a fan of food companies because it's a simple fact that we all have to eat. A lot of food companies may not be revolutionary stocks but they all have the potential to provide investors with market-beating returns.
There are lot of food shares on the ASX, but these two are ones I have my eyes on:
Domino's Pizza Enterprises Ltd. (ASX: DMP)
Domino's has been a rollercoaster for shareholders with the share price falling 41% since August 2016. However, that doesn't mean that the underlying business hasn't been doing well.
In FY17 it grew same store sales by 8%, earnings per share by 26.8% and the dividend by 26.9%.
Domino's has big plans to grow its number of outlets, margins and keep changing up its menu to grow same store sales.
It's currently trading at 28x FY18's estimated earnings with a partially franked dividend yield of 2.08%.
Tassal Group Limited (ASX: TGR)
Tassal is one of Australia's largest fish farmers, it grows large quantities of salmon in Tasmania's waters. I think Tassal has a promising future because of how Australians are generally changing their eating habits to be somewhat healthier.
However, fish is a commodity and the price can change for its product just like any other commodity. That's why the share price has fallen by 27% since March from $4.90 to today's $3.58.
The pleasing thing about the fall in Tassal's share price is that the dividend yield has grown, which should provide more income as long as Tassal maintains or grows the dividend. It currently has a grossed-up dividend yield of 5.99%.
Tassal is trading at 12x FY18's estimated earnings, which is a very reasonable valuation in my book.
Foolish takeaway
I'd be happy to own both of these shares and I may take the plunge to buy one or both of them if they stay near this price over the next few months when I next invest.
