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Pro Analysis

Food deflation getting worse, avoid these stocks, top analyst says

Man shopping for groceries.
Katrina Wittkamp | Getty Images

Investors should avoid grocery companies' shares in the short term due to the likelihood of more food price deflation into next year, according to Oppenheimer.

"The current food deflation cycle has lasted much longer than most anticipated, with the latest data point representing the worst reading," analyst Rupesh Parikh wrote in a note to clients Friday.

"Based on our work, we see the possibility of food deflation persisting well into next year, potentially through the middle of 2017. ... As a result, we continue to believe shorter-term investors should steer clear of grocery names."

Parikh's picks have a 17 percent one-year average return and a 59 percent success rate for a profit, according to analyst ranking service TipRanks. That places him in the top 2 percent of all Wall Street analysts covering any industry.