When the market is volatile, the Consumer Staples sector can be one of the safest go-to places for investors. Popular as an abode of defensive stocks, this space mainly comprises companies that provide essentials and products used in daily lives.
Thus, the sector is considered as one of the most trusted investment choices even when market conditions are not very congenial.
A Sneak Peek into the Economy
Talking of economic conditions, we note that the U.S. market that commenced 2018 on an overtly bullish note, has been see-sawing for quite some time now. On one hand, President Trump’s plans to impose 25% and 10% tariffs on imported steel and aluminum, respectively, have triggered fears about a likely trade war, mainly between the United States and China. Moreover, apprehension related to inflation were reflected in the market in early February.
On the other hand, impressive economic indicators such as low unemployment levels, increased consumer sentiment, rising economic activity and favorable jobs data led to a sixth Fed rate hike yesterday (since the financial crisis).
Incidentally, the benchmark rate was raised by a quarter point to a targeted 1.5-1.75% in Powell’s first FOMC meting as chairman. This was also followed by a raised GDP outlook for 2018. The Fed officials now envision GDP growth rate to be 2.7% up from 2.5% for the year, which may see two more rate hikes.
Here’s Why Consumer Staples is a Safe Haven
Amid such mixed factors, we recommend investors to add stocks from the Consumer Staples basket, as it usually lends more stability to one’s portfolio. Markedly, the Zacks Consumer Staples sector is currently ranked among the top 50% out of the 16 Zacks sectors.
The sector seems to be riding on the strength of its members that remain well-positioned — given their focus on innovations; cost-containment efforts; numerous product launches and constant M&A activities. Moreover, the sector remains a promising space for income-seeking investors, given its strong dividend yield and growth rate.
That said, we have brought to focus four prominent picks from the Consumer Staples family, which boast solid fundamentals and flaunt a favorable Zacks Rank. Moreover, these stocks have rallied more than 10% in the past three months even amid the ups and downs of the market.
Consumer Staples Stocks That Gained Over 10% in 3 Months: Calavo Growers, Inc. (CVGW)
Calavo Growers, Inc. (NASDAQ:CVGW) which topped earnings estimates in seven out of the past nine quarters now, is a solid bet. The Zacks Rank #1 (Strong Buy) company has seen its Zacks Consensus Estimate for the current quarter and fiscal go up by 1.2% and 6.1% to 83 cents and $3.14, respectively over the past 30 days.
Notably, this international consumer goods and farm products company has rallied 14.8% in the past three months, crushing the industry’s 2.9% growth.
Consumer Staples Stocks That Gained Over 10% in 3 Months: Medifast Inc (MED)
Sporting a Zacks Rank #1, Medifast Inc (NYSE:MED) is another valuable option. The company, with a spectacular earnings surprise record has gained a whopping 24.5% over the past three months, as against the industry’s decline of 10.1%.
Also, this leading manufacturer and distributor of clinically proven healthy living products and programs possesses long-term earnings per share growth rate of 15%. To top it, over the past 30 days – bottom-line estimates for the current quarter has jumped from 61 cents to 86 cents, while for the full year it has advanced from $2.60 to $3.25.
Consumer Staples Stocks That Gained Over 10% in 3 Months: Estee Lauder Companies Inc (EL)
Another big-wig with a superb past record is Estee Lauder Companies Inc (NYSE:EL). This Zacks Rank #2 (Buy) company has surged 14.7% in the past three months, surpassing the industry’s 8.1% rally. The cosmetics biggie has been gaining from its solid focus on buyouts and product launches, strength in emerging markets and robust online business.
Driven by these efforts, Estee Lauder marked its 14th and 4th straight earnings and sales beat, respectively, in second-quarter fiscal 2018. Notably, the company with a long-term growth rate of 13% has seen estimates for the current quarter as well as fiscal move upward by 5% and 4.1% to $1.05 and $4.36, respectively, over the past 60 days.
Consumer Staples Stocks That Gained Over 10% in 3 Months: Blue Buffalo Pet Products Inc (BUFF)
Investing in Blue Buffalo Pet Products Inc (NASDAQ:BUFF) which carries a Zacks Rank #2, can also prove to be a prudent choice. This developer, producer, marketer and seller of pet food products has gained 22.7% in the past three months, faring much better than the industry’s 7.5% drop.
The company, with a long-term growth rate of 24% has an average positive earnings surprise of 6.7% for the trailing four quarters. Additionally, the consensus mark for the first quarter and 2018 have gone up by 2 cents and 10 cents to 29 cents and $1.16, respectively, over the past 30 days.
Zacks Editor-in-Chief Goes “”All In”” on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.