Even as a resurgence of COVID-19 cases worries the food distribution industry, several educational institutes and restaurants have been reopening with the implementation of safety measures. Consequently, there could be rising demand for food distribution. Given this backdrop, we think the shares of food distribution companies Sysco (SYY) and US Foods (USFD) could soar in price in the coming months. Let’s discuss.The COVID-19 pandemic severely impacted the food distribution industry because most restaurants and public venues had to be closed, and educational institutes shifted to an online operating model.
While the resurgence of COVID-19 cases doesn’t bode well for the food distribution industry, food services venues, including restaurants and cafeterias, continue to recover, with sales climbing to a $72.2 billion all-time high in July, up from a pandemic low of $29.9 billion in April 2020. Also, several schools have reopened over the past few months, implementing required safety measures. So, the demand for food distribution services should increase.
Given this backdrop, we think food distribution stocks Sysco Corporation (NYSE:) and US Foods Holding Corp . (NYSE:) could deliver solid upside in the coming months.
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