Food stocks are a great way to get exposure to a defensive industry. Everyone has to eat, so if you can find the right stocks to take advantage then your portfolio should benefit.
Here are three of my favourite food stock ideas on the ASX:
Rural Funds Group (ASX: RFF) is the only real estate investment trust (REIT) that focuses purely on agricultural property.
It has a diversified portfolio of farms including poultry, cattle, almond, macadamia, vineyard and cotton. It also has great diversification with the farms spread across the four states of South Australia, Victoria, New South Wales and Queensland.
I think it's the best REIT on the ASX and it's currently trading with a distribution yield of 5.39%.
Collins Foods Ltd (ASX: CKF) is a large franchisee of KFC restaurants in several Australian states.
The main reason I'm interested in Collins Foods is its expansion overseas. It is growing in the Netherlands and Germany, both of which could be huge growth markets.
It's currently trading at 17x FY16's earnings with a grossed-up dividend yield of 4.23%.
Costa Group Holdings Ltd (ASX: CGC) is a large grower of fresh food with operations in Australia, China and Morocco.
It has a diverse range of produce including tomatoes, avocadoes, berries, citrus fruit and mushrooms. Fresh food has been growing in popularity every year and I think this will be shown with Costa's coming results.
It's currently trading at 60x FY16's earnings with a grossed-up dividend yield of 2.98%.
Foolish takeaway
I think all three of these stocks are worthy of being in a Foolish portfolio, however I'd try to buy Costa at a cheaper price.
I think Collins could be a good option for growth, while Rural Funds Group should be a good option for income.
