Buy Food Stocks? We All Gotta Eat

In a terrible time for most stocks, a few sectors have done awfully well. 

Energy, of course. Also defense and aerospace (there's a war on) and health care (needed always). Another strong sector may come as a surprise: food. ARCHER-DANIELS-MIDLAND, the giant food-processing company, surged 39.7% in 2022, and GENERAL MILLS, whose brands include Pillsbury, Häagen-Dazs and Progresso, returned 27.6%, including an attractive 2.6% dividend yield. I'm doing a little cherry-picking here (perhaps an apt metaphor), but the food sector-which includes agriculture, manufacturing, packaged goods and grocers-has outperformed the averages. (Stocks and funds I like are in bold; prices and other data are as of December 31.)

FIRST TRUST NASDAQ FOOD & BEVERAGE, an exchange-traded fund, returned 6.2% in 2022, beating the S&P 500 index, the large-cap benchmark, by more than 24 percentage points. The ETF has a broad portfolio that includes Lamb Weston, an Idahobased maker of frozen potato products, and Bunge, a 200-year-old company that's the world's largest processor of oilseeds. INVESCO DYNAMIC FOOD & BEVERAGE, whose assets include food distributor Sysco and Campbell Soup, whipped the S&P by 21 points.

But let's consider why food stocks have risen and whether the phenomenon is temporary. In other words, does the sector makes sense long-term?