Consumer staples stocks have generally been a safe haven during times of uncertainty. This has been especially true this year when there has been a lot of uncertainty.
By the end of 2022, the S&P 500 had dropped almost 18%, which was its worst annual showing since the 2008 financial crisis.
Along with persistently high inflation, rising interest rates, and uncertainty about the possibility of a more substantial slowdown in the United States economy, the aforementioned reductions have caused some investors to actively seek safer investment choices.
A lot of consistency and stability can be found in the consumer staples section of the market. There may be a drop in general buying habits, but businesses that sell things like detergent, shampoo, or packaged meals are likely to continue doing very well.
Given the aforementioned reasons, the following list contains nine consumer staples stocks that you should buy right away.
Different entities have their own unique qualities that set them apart from others. A lot of them also pay out big profits on top of the chance that the value of their shares will go up.
If you want to invest as an expat or high-net-worth individual, you can email me (advice@adamfayed.com) or use these contact options.
In general we suggest investing in funds and ETFs rather than individual stocks. This article will merely look at some of the better options.
Why Should You Invest in Consumer Staples?
Economic cycles are characterized by fluctuations in individuals’ expenditure patterns, encompassing both periods of expansion and contraction.
Consumer expenditure accounts for around 70% of the gross national product in our consumption-based economy.
Cyclical patterns are observed in consumer behaviour, wherein individuals tend to adjust their spending habits based on their perception of economic conditions.
This entails an inclination to increase expenditures during periods of economic strength while deferring purchases during times of high inflation or recession.
Price elasticity is a fundamental economic concept that incorporates the propensity of consumers to modify their expenditure patterns in response to fluctuations in prices.
These fluctuations, often referred to as ebbs and flows, play a defining role in shaping price elasticity.
Consumer staples are commonly regarded as noncyclical goods, indicating that their demand remains constant regardless of economic fluctuations. The consistent demand leads to a decrease in price elasticity.
Should You Add Consumer Staples Stocks to Your Investment Portfolio?
Investors commonly employ bonds and cash as risk management tools. Consumer staples companies are a viable defensive investment option that can be strategically incorporated to generate both capital appreciation and regular income.
These stocks generally do not present remarkable growth prospects and may experience a decline in value if interest rates increase.
Nevertheless, it is observed that the drop experienced by this particular industry is comparatively lower in magnitude when compared to other sectors during periods of economic recession.
Certain industries, such as the food, tobacco, and alcohol sectors, may experience an increase in demand during economic downturns.
Consumer staples stocks are known for their consistent growth due to the ongoing high demand. This characteristic renders them an attractive option for investors seeking a safe refuge during periods of inflation and recession.
Consumer staples stocks are known for their tendency to exhibit high and stable dividend yields.
Investors have the option to acquire consumer staples equities either individually or through specialized mutual funds or exchange-traded funds.
Nevertheless, it is necessary to reassess these companies in response to shifts in the economy in order to ascertain that the portfolio aligns with the risk requirements of the investor.
What are the Best Consumer Staples Stocks
Procter & Gamble Co. (PG)
The corporate headquarters of Procter & Gamble Co. is located in Cincinnati.
The establishment of the company occurred in 1837 when William Proctor, a candlemaker from Britain, and James Gamble, a soapmaker from Ireland, came to the United States and established their residence in Ohio.
Procter and Gamble encountered two sisters whom they subsequently married.
Procter & Gamble (P&G) was established subsequent to the proposal made by their shared father-in-law, who recommended that they form a business alliance.
Procter & Gamble (P&G) provides a diverse assortment of products encompassing personal care, hygiene, and health.
Over the course of the past decade, Procter & Gamble (P&G) has used a strategic approach to optimize its brand portfolio, prioritizing those that contributed to 95% of its overall profitability.
Procter & Gamble (P&G) also has a noteworthy track record in terms of dividend payments, boasting an uninterrupted streak of 67 years of annual increases.
Target Corporation (TGT)
Target Corporation, listed as TGT on the New York Stock Exchange, is a prominent American retailer renowned for its diverse range of general merchandise available for purchase in its physical stores.
The company is presently preparing to strategically focus on the holiday season in the United States by introducing a range of toys and games priced below $25 across its various retail locations.
A comprehensive examination of 910 hedge funds was conducted to investigate Target Corporation’s investment activities during the second quarter of 2023.
The investigation revealed that 45 hedge funds had acquired a stake in the company.
According to our database, Fisher Asset Management, led by Ken Fisher, holds the highest stake in Target Corporation (NYSE:TGT), with a significant investment of $272 million.
Coca-Cola Co. (KO)
The Coca-Cola Company, with its headquarters located in Atlanta, is widely recognized as one of the most valuable brands globally.
The establishment of the corporation may be traced back to the latter half of the 19th century when John Stith Pemberton invented a temperance beverage.
Subsequently, in 1888, Pemberton sold the rights to this invention. The initial formulation is a closely protected proprietary asset of the corporation.
Coca-Cola has demonstrated robust financial performance, as seen by its sustained profitability and continuous upward trajectory of dividend payouts over a span of 61 years.
Berkshire Hathaway Inc., headed by Warren Buffett, holds the largest interest in the company, solidifying its standing as one of the foremost consumer staples stocks.
Constellation Brands, Inc. (STZ)
Constellation Brands, Inc. (NYSE:STZ) is a prominent entity within the alcoholic beverage industry, renowned for its portfolio of products, notably including the Corona beer line.
This particular consumer staples stock stands out as being classified as a Strong Buy on average within our list. Analysts have projected a potential increase of $45 in the share price, based on the average share price.
Upon conducting an analysis of 910 hedge funds and their investment activities in the second quarter of the current year, it was ascertained that Constellation Brands, Inc. (NYSE:STZ) attracted the attention of 48 investors.
Holocene Advisors, led by Brandon Haley, emerges as the major stakeholder in this context since it possesses shares valued at $196 million.
Unilever PLC (UL)
Unilever, a worldwide corporation with its headquarters in London, operates as a British-Dutch entity and provides a diverse range of products including infant and pet meals, pharmaceuticals, and toiletries.
The establishment of the company occurred in 1929 by the amalgamation of Lever Brothers, a manufacturer of soap, and Margarine Unie, a producer of margarine.
Unilever, the foremost global soap manufacturer, has achieved substantial growth throughout the course of the century by means of strategic acquisitions, including Lipton in 1971, Ben & Jerry’s in 2000, and Dollar Shave Club in 2016.
The company’s current decline of 15% from its three-year peak can be attributed to its strategic initiatives aimed at optimizing its product portfolio and prioritizing the expansion of high-growth brands.
Nevertheless, UL has effectively increased pricing by using its robust core brands and strategic manoeuvres.
Due to the growing level of exposure to emerging countries and a substantial dividend yield, UL continues to be a prominent component within numerous investment portfolios.
PepsiCo, Inc. (PEP)
PepsiCo, Inc. (NASDAQ:PEP) is a multinational corporation operating in the beverage industry on a global scale.
This particular consumer staples stock has consistently exceeded analyst earnings per share (EPS) projections in its most recent four quarters. Analysts had estimated an EPS of $2.15 for the company’s third quarter.
Out of the total of 910 hedge funds during the June quarter of 2023, it was seen that 68 of them had maintained a financial interest in PepsiCo, Inc. (NASDAQ:PEP).
Fundsmith LLP, managed by Terry Smith, holds the largest holding among the mentioned stakeholders, with significant ownership of shares valued at $1.2 billion.
Nestle SA (NSRGY)
The headquarters of Nestle is located in Vevey, Switzerland. The establishment of the corporation occurred in 1905 through the amalgamation of the Anglo-Swiss Milk Corporation and a baby food enterprise initiated by Henri Nestle.
Presently, Nestle stands as the preeminent publicly traded food corporation on a global scale, providing an extensive assortment of consumable goods encompassing both nourishment and beverages.
Additionally, it holds a significant stake in L’Oreal, which is widely regarded as a popular choice among investors in the consumer staples sector.
Similar to Unilever, Nestle has experienced growth through strategic corporate acquisitions, including the notable examples of Libby’s in 1971 and Gerber in 2007.
Mondelez International, Inc. (MDLZ)
Mondelez International, Inc. (NASDAQ: MDLZ) is a prominent American confectionery manufacturer renowned for its assortment of popular brands, including Cadbury.
This particular consumer staples stock stands out as a robust contender on our list because of its consistent track record of surpassing analyst earnings per share (EPS) projections in each of its four most recent fiscal quarters.
Among the 910 hedge fund portfolios analyzed for their shareholdings during the second quarter of 2023, it was seen that 55 of them had maintained a position in Mondelez International, Inc. (NASDAQ: MDLZ).
Holocene Advisors, led by Brandon Haley, emerges as the preeminent investor within the aforementioned group, with ownership of 3.3 million shares valued at $247 million.
Estee Lauder Cos. Inc. (EL)
The corporate headquarters of Estee Lauder is located in the General Motors Building in New York City. Estee Lauder, a globally renowned cosmetics enterprise, provides a diverse range of products encompassing cosmetics, hair care items, and fragrances.
The portfolio of the company encompasses renowned brands such as Aveda, Bobbi Brown, and Clinique, among several others.
The skincare line was established in 1946 by Estee Lauder and her spouse, Joseph. One year later, the company received its initial significant order from Saks Fifth Avenue.
During the 1990s, there was a shift from organic expansion to a strategic emphasis on acquisitions. The initial public offering (IPO) of Estee Lauder occurred in 1995.
The organization has persistently engaged in strategic acquisitions, shown by its noteworthy acquisition of the Tom Ford designer fashion house in 2022.
Remarkably, the organization adeptly adapted its strategies throughout the COVID-19 pandemic, wherein the implementation of social distancing measures and the availability of remote work options resulted in a decrease in the market demand for cosmetic products.
This company is favoured by investors due to its exceptional capacity to deliver superior growth compared to its industry counterparts, while also benefiting from the overall stability of the sector.
Colgate-Palmolive Company (CL)
The Colgate-Palmolive Company, listed on the New York Stock Exchange under the ticker symbol CL, is a widely recognized consumer goods company that specializes in oral care products, including toothpaste and toothbrushes.
Similar to Mondelez, the company has also surpassed the earnings per share (EPS) forecasts provided by analysts in each of the four most recent quarters. On average, analysts have assigned a Buy rating to the shares, projecting a potential upside of $14 based on the average share price.
As of the second quarter of 2023, 58 out of the total 910 hedge funds had made investments in the aforementioned company.
The largest shareholder of Colgate-Palmolive Company (NYSE:CL) is First Eagle Investment Management, owned by Jean-Marie Eveillard, with a significant position valued at $854 million.
Hedge funds are acquiring consumer staples stocks such as The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), PepsiCo, Inc. (NASDAQ:PEP), and Walmart Inc. (NYSE:WMT), which are seen as some of the top choices in this sector.
Walmart Inc. (WMT)
The corporate headquarters of Walmart is situated in Bentonville, Arkansas, which also happens to be the original location of the company’s first stores.
Established in 1962 by siblings Sam and James “Bud” Walton, Walmart is a globally operating retail conglomerate with more than 10,500 Walmart shops and Sam’s Clubs across 20 nations.
Walmart holds the distinction of being the foremost global corporation in terms of revenue generation.
It also stands as the greatest private employer worldwide, boasting a workforce of over 2.1 million individuals.
Furthermore, Walmart holds the position of the largest grocery retailer in the United States. The Walton family maintains ownership over Walmart, although the company underwent an initial public offering in 1972.
In April 2023, Walmart made public its intention to establish a network of fast-charging stations for electric vehicles at numerous places around the United States.
According to Vishal Kapadia, the senior vice president of energy transformation at Walmart, our company possesses a distinctive advantage in providing a convenient charging solution that will facilitate the feasibility of electric vehicle ownership, regardless of whether they reside in rural, suburban, or urban regions.
The widespread presence of Walmart and Sam’s Club stores within a 10-mile radius of around 90% of the American population has the potential to accelerate the acceptance and utilization of electric vehicles (EVs).
Moreover, the duration required for charging would enable consumers to engage in shopping activities at their convenience, hence potentially contributing to an increase in sales.
Costco Wholesale Corporation (COST)
Costco Wholesale Corporation (NASDAQ:COST) is a bargain retailer that experiences increased consumer demand as a result of declining incomes.
The firm reported during a recent conference call that its subscriber renewals had reached an unprecedented level, which appears to be a positive outcome in light of the current economic constraints and elevated inflation.
At the conclusion of the second quarter of the current year, a total of 67 hedge funds out of the 910 in existence had made purchases of the company’s shares.
According to our database, Fisher Asset Management, managed by Ken Fisher, holds the highest investment in Costco Wholesale Corporation (NASDAQ:COST), with a position valued at $1.4 billion.
Philip Morris International Inc. (PM)
Philip Morris International is legally headquartered in Stamford, Connecticut, however, its operating headquarters are situated in Lausanne, Switzerland.
The origins of the corporation may be traced back to the year 1847, during which Philip Morris established a solitary tobacco and cigarette retail establishment in the city of London.
Nonetheless, in 1881, Leopold Morris collaborated with Joseph Grunebaum to establish the enterprise that eventually evolved into Philip Morris & Co. Ltd. Philip Morris, a prominent company recognized for its renowned brand Marlboro, achieved the status of being the highest-selling cigarette brand globally in the year 1972.
The Phillip Morris company continues to be a subject of controversy when considering environmental, social, and governance (ESG) screening.
This is mostly owing to the addictive properties of its product and its market presence in Russia during the peak of the Ukraine conflict.
Nevertheless, this particular consumer staples stock continues to maintain its popularity due to the ongoing global increase in the number of smokers.
Additionally, the company boasts a track record of 14 years of uninterrupted dividend growth, further enhancing its appeal to investors.
Final Thoughts
With the help of private banking services and well-managed investment funds, investors looking for chances on the stock market might consider diversifying their portfolios by examining the top consumer discretionary stocks.
Monitoring the top FTSE 250 stocks and AIM stocks can also help investors identify promising prospects in the consumer staples market.
Consumer staples stocks are often recommended as a safe bet, as they provide regular dividends and have the potential for long-term growth. You might also want to invest in consumer staples ETFs.
As an investor, you need to pay special attention to the best consumer staples stocks. Long track records of operational efficiency, strong supply chain management, competitive pricing, and well-known brand names are common characteristics of the stocks that make up this category.
Therefore, high-quality consumer staples companies might be great options for low-risk investors looking for relative safety and consistency in good and bad times.
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Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.
