Over the past decade, consumer staples stocks have outperformed the broader market. The S&P 500 Consumer Staples Index has gained an average of 9.4% annually, while the S&P 500 Index has gained an average of 7.2% annually. GIS stock has been an under-performer this year, having declined 20% since January.

• Besides, a good value isn’t always expressed in a company’s P/E ratio.
• The company started as a condensed milk company, and milk chocolate was one of its first products.
• The stocks are listed according to their hedge fund sentiment, which was taken from Insider Monkey’s database of 895 elite hedge funds.

A veteran journalist with extensive capital markets experience, Jeff has written about Wall Street and investing since 2008. His work has appeared in numerous respected finance outlets, including CNBC, the Fox Business Network, the Wall Street Journal digital network, USA Today and CNN Money. Sales are forecast to rise in the mid-single digits this fiscal year and next, showing that Coke is a powerful consumer stock that knows how to connect with its customers. In fact, MO stock lost a mere 2% last year, marking it as one of the better-performing stocks in the S&P 500. On top of that, Altria is one of the best dividend growth stocks, having logged more than 50 consecutive years of dividend increases to boast a sustainable and generous payout.

A Lifetime of Passive Income Is Hiding in Plain Sight

While people may delay spending on non-essential or discretionary items when times get tough, everybody still needs to eat and bathe. The critically important nature of their products helps to explain why many consumer staple stocks are among the best-performing securities of the last 10 years. They can help keep a portfolio buoyant even in the event of an economic or market decline. Consumer staples stocks can be a good option for investors seeking steady growth, solid dividends, and low volatility. Brand power is pretty much everything in this sector, and companies that lack this key ingredient are consumer staples stocks to sell.

The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank. Click here to download Jim Cramer’s Guide to Investing at no cost to help you build long-term wealth and invest smarter. With its over 138,000 employees worldwide, the company has been in business since 1929. The Consumer Staples industry is up 1.5% in the last week, with Hindustan Unilever up 2.9%.

The Procter & Gamble  has benefitted from robust pricing and a favorable mix, along with strength across segments. PG’s products play a key role in meeting the daily health, hygiene and cleaning needs of consumers around the world. PG witnessed continued strong momentum as reflected by the underlying strength in brands and appropriate strategies, which aided its organic sales growth. Estee Lauder is the second-biggest pure-play cosmetics company in the world behind L’Oreal (LRLCY -2.02%), and it has an impressive array of prestige beauty brands, including Clinique, Aveda, La Mer, and MAC. The company’s recent growth has been driven in large part by its success in the Chinese market, where its skin care products have performed particularly well. Over the long term, the ETF is probably going to underperform the S&P 500.

• In the stock market, the simplest ideas are often the most effective.
• This is because investors sometimes pay more for a company with premium earnings, as can be seen from some of the most expensive stocks on the market today.
• That’s why they’re often considered defensive safe havens during a recession.
• The drop was notable, taking organic sales growth to between 5% and 7%, down from the previous guidance of 10% to 13%.
• The S&P 500 Consumer Staples Index has gained an average of 9.4% annually, while the S&P 500 Index has gained an average of 7.2% annually.

With the central bank looking unlikely to pivot anytime soon, fears are mounting on Wall Street that a recession could be in the cards for next year. We have, therefore, highlighted three inflation-proof consumer staples stocks that astute investors should keep a tab on. These stocks have paid dividends steadily, indicating a solid business model. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here. Consumers may be compelled to cut back on discretionary spending but must purchase staple products.

Consumer Staples Stocks

When it comes to the best consumer staples stocks, it’s hard to top the international powerhouse that is Coca-Cola (KO, $60.12). With a global scale and more than 120 years of operating history, Coke is among the most recognizable brands on the planet and logs consistent sales in any market environment. As stocks rise in price, dividend yields will fall if the size of the dividend does not increase as well. Conversely, if stocks fall in price and if the dividend payout does not change, then the dividend yield increases. More importantly, the consumer staples sector has outperformed the S&P 500 during the last three recessionary periods—or periods of negative growth in the gross domestic product (GDP).

Why Is T2 Biosystems (TTOO) Stock Down 48% Today?

Elevated oil prices leading to a rise in inflation decreases the purchasing power of your dollars. This leads to a drop in consumer outlays, which impacts economic growth and spurs volatility in the stock market. We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises. Consumer staples companies have an excellent ability to withstand recessions, increase their dividends, and post consistent, incremental growth. All of those characteristics make them good choices for investors looking for reliable, income-producing stocks.

Zacks’ 7 BestStrong Buy Stocks for October, 2023

That’s why they’re often considered defensive safe havens during a recession. Consumer staples stocks tend to trade at a premium to the market, so it is important to find companies that are trading at a reasonable price. The other side to this is that a company could have a high P/E ratio and still be a viable investment. This is because investors sometimes pay more for a company with premium earnings, as can be seen from some of the most expensive stocks on the market today.

When buying individual stocks, it’s imperative to do due diligence and research the consumer discretionary stocks you’re interested in. Individual stock picking can be a very risky way of investing, and that means you should pursue this strategy with your eyes wide open. Kellogg (K, $68.38) boasts some of the most popular brands on the planet, including Froot Loops, Pringles, thinkmarkets broker review Pop-Tarts, Cheez-Its and more. That means it’s hard to imagine any economic environment where consumers drop Kellogg’s offerings from their shopping carts. Even the insinuation that they could be unsafe is enough to erode trust in the brand. A decades-long lawsuit would only refresh consumers’ memory of this scandal over and over again with every new development.

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Its Frito-Lay snack business generates almost as much revenue in North America as its beverages, and that business has been a source of growth while soda sales slow in the U.S. and around the world. With its global brands and distribution, Pepsi enjoys many of the same advantages as industry giants P&G and beverage company competitor Coca-Cola (KO 0.15%). Consumer staples companies may not have the highest earnings growth or year-over-year revenue growth because these stocks tend to be large, mature companies. Historically, the sector has experienced relatively little disruption. But these stocks make up for modest growth with low price volatility, reliable profits, dividends, and defensive positioning. L’Oreal is a French company that manufactures a range of personal care products, including cosmetics.

Risks of Investing in Consumer Staples Stocks

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. However, five consumer staple stocks with a favorable Zacks Rank are poised to beat on earnings. The combination of a favorable Zacks Rank and a possible earnings beat should drive their stock prices in the near-term. exness company review Bearing these details in mind, let’s look at the consumer staples giants of the world. For additional information on these companies, you can also look into the best consumer staples dividend stocks to buy now and the small cap consumer staples stocks billionaires are loading up on.

Chair Jerome Powell also signaled that the central bank needs to parse through more data to be convinced that inflation is lowering substantially. Given the current valuation and dividend, GIS stock should be seen as a buy-the-dip opportunity. review time series analysis Marie Brodbeck has a Finance degree from Duquesne University and has been a financial journalist for more than a decade. Her work can be seen in a variety of publications including InvestorPlace, Benzinga, Yahoo Finance and CCN.