Thanks to the reality TV program Doomsday Preppers and notorious conspiracy theorists like Alex Jones, the concept surrounding consumer staples stocks aligned with the principles of a prepper portfolio may arouse chuckles, if not ridicule. I get it. The whole idea of prepping has been characterized under the framework of buffoonery.
Of course, that might be because that’s what “they” want you to think! In all seriousness, though, the prepper portfolio is no laughing matter. According to information broadcasted in a CBS News program, it’s possible that around 15 million Americans represent active preppers. So, by that logic, consumer staples stocks geared toward the firearms industry may be lucrative.
Also, we think of preppers in the most extreme context. In reality, hundreds of millions of Americans acquire readiness gear to survive all kinds of natural (and unnatural) disruptions. Such a mass of humanity will almost certainly carry a significant economic impact.
You’re not laughing much now, are you? Given our newfound respect, below are consumer staples stocks to buy to build the perfect prepper portfolio.
Fresh Del Monte (FDP)
To start this list on a conservative note (at least from a narrative perspective), we should look at Fresh Del Monte (NYSE:FDP). Per its public profile, the company is one of the world’s leading vertically integrated producers, distributors and marketers of fresh and fresh-cut fruits and vegetables.
What I like here is that irrespective of market movement, we all need to eat our fruits and vegetables. So, FDP may rise higher on this permanently relevant concept. Now, it’s a risky idea because shares lost 13% of equity value since the beginning of the year. In the trailing five years, FDP shed 28% of value, undoubtedly frustrating stakeholders.
Nevertheless, FDP could rank among the consumer staples stocks to buy because of its attractive valuation. Per a Seeking Alpha article, FDP now trades at a trailing-year earnings multiple of under 10x. Also, the company provides a forward dividend yield of nearly 4%. Analysts don’t cover it but that might be a mistake based on the discount.
An easy idea to bring up for consumer staples stocks for the prepper portfolio, Colgate-Palmolive (NYSE:CL) certainly doesn’t rank as an exciting enterprise. Known for its toothcare and cleaning products, it’s an everyday brand. However, for those with an extreme view in terms of preparedness for the zombie apocalypse, CL may be life or death.
Fundamentally, toothcare represents a vital component of overall health. By taking care of your teeth, you can potentially mitigate other risks. And that’s not just for extreme outdoors people but also for everyday households that don’t plan on leaving the comforts of suburbia.
Financially, Colgate doesn’t really offer a discount. Instead, its main selling point centers on its consistently and predictable revenue growth and extensive profitability track record. For example, in the third quarter, the company posted revenue of $4.92 billion, up over 10% on a year-over-year basis.
Analysts peg CL a moderate buy with an $81.15 price target, implying over 8% growth.
Another no-brainer if you’re looking for consumer staples stocks to add to the prepper portfolio, Walmart (NYSE:WMT) is the ubiquitous one-stop shop for whatever you need. From food to firearms to clothing and video game consoles, whatever you want, you can probably find it at Walmart. As a result, it’s one of the most prepper-friendly establishments.
Having shopped at the big-box retailers a few times, I can confirm that your stereotypical prepper often walks the aisles. But here’s the other thing. When disaster strikes, anyone can adopt the prepper mentality. Just from a common-sense standpoint, WMT represents a viable idea for consumer staples stocks.
As with Colgate-Palmolive above, I wouldn’t classify WMT as a discounted opportunity. Instead, its strength lies in business predictability. For example, since its fiscal year ended January 2016, Walmart has posted consecutive annual revenue increases. And with trailing-12-month (TTM) sales of $630.79 billion, it’s one pace to continue to trend.
Analysts rate WMT a strong buy with a $179.82 target, implying over 9% upside.
To be sure, while PepsiCo (NASDAQ:PEP) represents one of the classic consumer staples stocks to buy, it just hasn’t performed well. Since the start of the year, PEP slipped a hair over 7%. However, it’s possible that a turnaround could be coming. Last week, shares gained over 3% of equity value. Also, options flow data – which exclusively targets big block trades likely made by institutions – reveals bullish wagers placed on Friday.
Adding to the contrarian sentiment, last month, PepsiCo posted earnings per share of $2.25. This beat out the consensus target calling for $2.15. On the fundamental side, I still believe that social normalization trends should benefit the soft-drink giant. As various economic pressure points cloud consumer sentiment, everyday folks will likely eschew expensive trips to the coffeeshop for caffeinated products at the grocery store.
In theory, this framework should benefit PEP as a byproduct of the trade-down effect. Also, analysts peg shares as a moderate buy with a $188.88 target, projecting over 13% growth.
Let’s face it: Anheuser-Busch (NYSE:BUD) immediately seems a bad idea for consumer staples stocks to buy for the prepper portfolio. Of course, preppers come in all shapes, sizes and ideologies. But I think it’s safe to say that the most extreme within this demographic tend to at least share libertarian views, if not outright conservative views. Because of this dynamic, Anheuser-Busch’s Bud Light brand is a problem.
However, I’d like you to hear me out for a second. While critics blasted the Bud Light brand for going woke, the impact wasn’t as severe as many would have assumed. Yes, an impact did materialize, with Bud Light no longer America’s top beer. However, it merely fell to number two. And that means time should heal all wounds (because it’s not that big of a deal).
Philip Morris (PM)
While the prepper portfolio may predominantly focus on the essentials, you also need stress release. Cynically, then, Philip Morris (NYSE:PM) symbolizes a solid candidate for consumer staples stocks. At first glance, PM might not seem a great idea. After all, global smoking rates have declined, seemingly leaving Philip Morris with a smaller addressable market.
However, the dramatic rise of vaping – or the use of e-cigarettes – offers revenue-generating opportunities for big tobacco firms. In addition, much criticism erupted about vaping regulations in the U.S. targeting small businesses. Such a trend can easily materialize in other countries, leaving the largest enterprises with dominant market share. Naturally, such a framework should help PM stock.
Plus, even with sector-wide challenges, Philip Morris has been consistently profitable. It also prints strong profit margins relative to its industry. Therefore, it’s positioned to offer a generous forward dividend yield of 5.68%.
Lastly, analysts peg PM a consensus strong buy with a price target of $108.35, projecting over 18% growth.
Since we’re talking about consumer staples stocks that may align well with a prepper portfolio, we can’t avoid a discussion about Olin (NYSE:OLN). On the surface, Olin seems harmless enough, primarily operating as a manufacturer of chemicals; specifically, chlorine and sodium hydroxide. However, go through the backdoor and you’ll come across its ownership of the Winchester brand.
As one of the top producers of ammunition, Winchester enjoys a robust reputation with preppers. After all, if you’re going to live off the land, you’ve got to, well, live off the land. That means shooting animals for their meat, along with their fur for coats and such. Also, ammunition can be very practical. If you’re lost in the woods and you need to signal for help, three evenly timed shots should do it.
On a more practical level, Olin serves multiple industries. And while the firearms sector carries controversies, it also hires many Americans.
Finally, analysts rate OLN a moderate buy with a $56.08 target, implying almost 26% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.