4 Food Stocks To Consider Dumping As Trump Tariffs On Mexico Loom

Consumers will likely get a reprieve from the Trump Administration’s tariffs at least until the first week of April. Still, the scattershot tariffs, combined with weakening economic data, seem to have spooked investors.

We won’t know what happens next for a while, but Mexico continues to be a target of the Administration’s tariff policies.

We’re already starting to see the effects of this on imports like vehicle parts, electronics and apparel. But the even bigger hit may land on food and beverages. Berries, cucumbers, tomatoes, peppers, avocados and many more perishables are all imported to the U.S. from Mexico at high rates, especially during the off-season.

Tariffs and uncertainty are already impacting these imports, and more will likely follow. Companies that rely on these imports will struggle to pass on the added costs to their customers.

Let’s take a look at four food stocks you’d be wise to avoid.

Chipotle Mexican Grill Inc.

Let’s start with the obvious one. Chipotle CMG, whose stock has taken hits from multiple directions over the last few months. For starters, fears of an economic slowdown have shifted how Americans eat, and restaurant sales are beginning to sag as more people choose to eat at home. And now, the promise of tariffs on Mexico threatens to drive up prices for the casual fast-dining chain, which sources many crucial products from Mexico, especially its famous guacamole.

Chipotle could see severe price increases on its menu items, which source many ingredients like lettuce, tomatoes, avocados, fresh peppers and spices from Mexico. And while Chipotle's margins are strong compared to competitors like Wendy's or Domino's, gross margins have declined for three consecutive quarters. The stock's valuation is pretty lofty as well, with a 42.7 price-to-earnings (P/E) ratio, 2.36 PEG ratio, and a 5.7 Price-to-Sales (P/S) rate. CMG's latest earnings release disappointed investors as the company matched EPS estimates but missed on revenue. Benzinga Edge gives the stock only a 28.28 score for Momentum and 16.29 for Value.

Calavo Growers Inc.

One of the largest growers of avocados in the world, Calavo Growers CVGW would face significant pressure from Mexico tariffs. Calavo sells avocados, tomatoes and fresh papaya to grocery stores, food distributors, clubhouse wholesalers and food service industries. In a sector with already razor-thin margins, Calavo has limited ability to absorb price increases and also limited negotiating power with its clients, who also have thin margins, like grocery stores and wholesalers. 

Calavo recently broke a string of 12 consecutive quarters with negative net margins. Still, its valuation remains elevated as the stock trades at 30 times earnings, two times book value and 19.5 times free cash flow. It also grades poorly in two crucial Benzinga Edge metrics: 22.73 in Momentum and 35.38 in Growth. In its most recent earnings release on March 12, the company beat on EPS estimates but missed on revenue. Analysis of CVGW is sparse, with only one firm updating its view so far in 2025. Lake Street analyst Ben Klieve has maintained the stock at Buy but lowered his price target to $35 from $40.

US Foods Holding Corp.

Another fresh food distributor with consistent revenue and earnings declines recently is US Foods Holding Corp. USFD, which distributes perishable, non-perishable, and non-food products to restaurants, schools, hospitals, government offices and grocery stores. Customers can get fresh, frozen, or dry food delivered from 70 different locations. The firm lists over 250,000 establishments as clients. US Foods has better profit margins than Calavo, but it’s still in a very slender range. The company saw its net profit margin shrink in the most recent Q4 earnings release, which was the first margin decline in nearly two years.

US Foods could suffer from tariffs and declining restaurant foot traffic in the coming months. USFD earnings have been evaporating for three straight quarters and its valuation has gotten stretched. The stock currently trades at 32.7 times earnings, and despite its margin growth, the company still lags behind competitors like Sysco and Mission Produce in turning revenue dollars into actual profit.

Benzinga Edge isn't too fond of the stock's short-term future either, with just a 29.24 Value score and 43.19 Growth score. Some analysts defended the stock in February with price target hikes despite a Q4 revenue. However, EPS and revenue projections for the Q1 report on May 8 are lower than in the three previous quarters.

Fresh Del Monte Produce Inc.

Don't let the enticing dividend fool you – Fresh Del Monte Produce FDP could struggle in the coming months if tariffs take a bite out of the company's profits. Fresh Del Monte produces and distributes fresh fruit and vegetables, including pineapples, melons, avocados, bananas, non-tropical fruits and other prepared foods. However, alarm bells began to sound in February thanks to a disastrous Q4 earnings report, which saw the company miss EPS estimates by nearly 30% and revenue by almost 2%.

Fresh Del Monte posted a 3.3% profit margin in the most recent quarter, which is stronger than food giants like Tyson Foods or Archer Daniels but still less attractive than smaller competitors like Cal-Maine Foods and Vital Farms. The stock trades at just 10 times forward earnings with a 0.34 Price-to-Sales (P/S) ratio, but Benzinga Edge has poor short-term views for FDP shares thanks to a 52.13 Quality score and a paltry 4.48 Growth score.

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