Dean Foods Co (NYSE:DF) is trending lower this morning despite offering up a fourth-quarter earnings beat. However, Dean and other food giants, including Tyson Foods, Inc. (NYSE:TSN) and Campbell Soup Company (NYSE:CPB), remain some of the best performers year-to-date in a challenging market.
Consider that in the last six months, the S&P 500 is down a few percentage points while DF stock is up roughly 12%, CPB stock is up 25% and TSN stock is up 50% in the same period.
With returns like that, it’s clear that these consumer staple stocks are not just good defensive investments, but good profit sources too.
Here are the details for each of these packaged foods giants that are collectively kicking butt in 2016:
Dean Foods: The dairy products company whose brands also include TruMoo and Country Fresh just posted earnings that have more than tripled year-over-year to top expectations. Furthermore, while DF stock is taking a hit Monday after its earnings report, Dean did issue strong guidance for Q1 as a hint that this outperformance should still continue. Currently, Dean Foods only offers a dividend of about 1.4%, but it continues to show strong share performance. DF stock is valued at a forward price-to-earnings ratio of about 15 right now, which is actually a hair cheaper than the 15.8 earnings multiple for the broader S&P 500.
Tyson Foods: TSN stock reported strong results a few weeks back, including an increase of 38% in earnings to top expectations. Strong spending, particularly in emerging markets, and low meat prices led to a jump in margins that could offset the currency exchange pressures other multinationals face. TSN stock pays a dividend of only 1%, but the outperformance of the shares and its ability to withstand a downturn makes it worth a look. Tyson also boasts a pretty attractive forward P/E of under 15 right now, which means it could still be a good value even after this run.
Campbell Soup: CPB doesn’t report fiscal second-quarter earnings until Thursday, Feb. 25, but recently just boosted its fiscal 2016 earnings guidance, which includes a boost to its projected Q2 earnings. Campbell Soup now expects earnings growth of 9% to 12% on the year, thanks in large part to recent cost cutting to boost margins. CPB stock currently pays a 2% dividend based on current prices, but admittedly, the forward P/E ratio of nearly 20 is a bit stretched right now.
Any of these plays could be a strong bet in 2016, both because of recent outperformance and because these consumer staple plays are a great “risk-off” trade amid market volatility.
After all, consumers everywhere still have to eat regardless of central bank shenanigans and broader economic conditions.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not hold a position in any of the aforementioned securities.
