What Happened?
A number of stocks fell in the afternoon session after Iran peace talks collapsed pushing up expenses for packaged food companies.
Consumer staples companies, food, beverages, and household good, use oil and natural gas throughout their supply chain. Natural gas powers fertilizer plants, crude oil feeds packaging resins and shipping fuel, and vegetable oil prices track crude closely.
When oil rises, the cost of making and delivering every box of cereal and bottle of ketchup rises with it. For example, Kraft Heinz expects 4% input cost inflation this year with resin hedges expiring in mid-Q3. General Mills reported gross margins down 310 basis points in Q3 fiscal 2026, directly attributable to higher input costs.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Beverages, Alcohol, and Tobacco company MGP Ingredients (NASDAQ: MGPI) fell 4.8%. Is now the time to buy MGP Ingredients? Access our full analysis report here, it’s free.
- Perishable Food company Freshpet (NASDAQ: FRPT) fell 5.5%. Is now the time to buy Freshpet? Access our full analysis report here, it’s free.
- Household Products company Energizer (NYSE: ENR) fell 4.8%. Is now the time to buy Energizer? Access our full analysis report here, it’s free.
- Personal Care company Coty (NYSE: COTY) fell 4.6%. Is now the time to buy Coty? Access our full analysis report here, it’s free.
Zooming In On Freshpet (FRPT)
Freshpet’s shares are very volatile and have had 28 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 12.1% on the news that the company reported third-quarter financial results that significantly surpassed Wall Street's profit expectations.
Net sales for the quarter rose 14% year-over-year to $288.8 million, exceeding analyst forecasts. The company's earnings per share (EPS) came in at $1.86, which was substantially higher than the average analyst forecast of $0.42. This large increase in profit was primarily due to a one-time deferred tax benefit of $77.9 million.
Freshpet also reported strong volume growth of 12.9% and an improved operating margin, which rose to 8.6% from 4.7% in the same period last year. The company generated positive free cash flow of $31.56 million for the quarter.
Freshpet is down 16.3% since the beginning of the year, and at $50.34 per share, it is trading 43.8% below its 52-week high of $89.64 from May 2025. Investors who bought $1,000 worth of Freshpet’s shares 5 years ago would now be looking at only $296.34.
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