The food industry is a wide-ranging sector and it has many interesting businesses to choose from.
Australia is growing to be the food bowl of Asia. Our huge amounts of farmland and diverse climates means just about any food can be grown in Australia.
We are also one of the richest nations in the world, meaning (on average) we have plenty of disposable income to spend on takeaways, cafes and restaurants.
The ASX has plenty of food stocks on offer, including these three:
Collins Foods Limited (ASX: CKF)
Collins is best known for being a large franchisee of KFC outlets across Australia.
KFC may not seem like a growth idea, but the number of outlets across Australia is growing. The more outlets that Collins adds to its portfolio, the bigger its economies of scale becomes.
The best reason why I think Collins could be a good investment is its expansion into Europe. Collins recently acquired a small number of KFCs in Germany and the Netherlands. Both of those countries have larger populations than Australia, offering plenty of growth.
Collins is currently trading at 20x FY17's earnings.
Tassal Group Limited (ASX: TGR)
Tassal is Australia's largest salmon farmer. The Australian population is steadily eating more fish, particularly salmon, each year. This is coming about from health and personal ethics choices.
Tassal is selling more fish every year and the bottom line is growing along with that sales growth. In FY17 revenue grew by 4.5% and operational earnings before interest and tax grew by 11.2%.
It's currently trading at 14x FY18's estimated earnings with a grossed-up dividend yield of 5.07%.
Retail Food Group Limited (ASX: RFG)
Retail Food Group is a master franchisor of many food brands including Donut King, Brumby's, Crust Pizza, Cafe2U and Gloria Jeans.
The franchisees may not be making a heap of cash, but Retail Food Group keeps churning out growth of earnings per share and the dividend.
It's quite cheap trading at 12x FY17's earnings with a grossed-up dividend yield of 9.7%.
Foolish takeaway
I think the food industry is an exciting place to be if you're invested in the right business. I think Collins is the best option out of the three I've mentioned because of how much potential growth there is in Europe.
