In an economy tackling persistent inflation, where core prices edged up in November, and the year-on-year core rate remained at 4%, investors are looking toward the future. On a more positive note, with anticipated rate cuts on the horizon post-Fed’s recent meeting, the focus shifts to inflation-resistant investments. Consumer staples stocks emerge as a smart choice, offering both stability and potential growth. These stocks are less susceptible to economic downturns, providing a buffer in these turbulent times. In this context, here are seven standout consumer staples stocks to buy, poised not just for strong downside protection but also for promising upside in the face of ongoing market volatility.
Procter & Gamble (PG)
Procter & Gamble (NYSE:PG) stands out as one of the most reliable consumer staples stocks to buy and long-term investments in the current stock market landscape. Generating a total return of over 140% over the past decade, it has raised its handsome dividend payout for over 67 consecutive years. Although PG stock has remained relatively flat this year, its financials have held up remarkably well against a challenging backdrop.
Its most recent financial update affirms its robust position further, beating Wall Street forecasts with an EPS of $1.83, exceeding the expected $1.72. Revenue also outperformed market expectations, reaching a whopping $21.87 billion, beating analyst estimates by $292 million. In the past three consecutive quarters, PG has beaten estimates across both lines by comfortable margins, showcasing its prowess. Moreover, the company’s ability to maintain strong earnings amidst rising inflation, aided by a strategic 7% price increase on its products, showcases its notable pricing power and market resilience.
Mondelez International (MDLZ)
Mondelez International (NASDAQ:MDLZ) is a renowned player in the global confectionery and snacks market, showcasing its diverse and powerful business model. Excelling in food, beverages, and snacks, the company’s strength lies in its powerful branding, which has effectively driven volume growth despite rising prices. In its third-quarter earnings call, the company reported impressive sales of $9.02 billion, marking a 16.2% year-over-year (YOY) increase and an adjusted EPS of 82 cents which beat estimates by four cents.
This success is a continuation of Mondelez’s trend of consistently beating estimates for seven consecutive quarters, demonstrating its robust positioning in the market. Additionally, its dividend profile is equally impressive, with a forward dividend yield of 2.35% and an annual payout of $1.70, complemented by a five-year growth rate of 11.42% and nine years of dividend growth. Mondelez’s financial resilience and growth prospects make it a compelling choice for investors looking for stability and steady returns in the consumer goods sector.
Colgate-Palmolive (CL)
Colgate-Palmolive (NYSE:CL) is a stalwart in the consumer goods industry, enjoying unwavering demand even during economic downturns. With a variety of oral-care products, including toothbrushes, toothpaste, and preventative solutions, the company has established itself as a household name synonymous with oral hygiene. Beyond its oral-care offerings, it has expanded its product portfolio to include home care, personal care, and pet nutrition products.
One of the standout features of the company is its reliable track record of growing its dividends, with a powerful forward yield of more than 2.62%. While it may not boast the highest yield among dividend stocks, its streak of 61 consecutive years of dividend growth demonstrates its commitment to rewarding shareholders.
In its most recent third-quarter earnings report, the company exceeded expectations, reporting a non-GAAP EPS of 86 cents, beating estimates by six cents, while recording sales of $4.92 billion, a notable 10.3% YOY increase, surpassing expectations by $100 million. The company’s ability to outperform in both earnings and revenue reaffirms its strong market position and its potential for continued growth. You’ll definitely want to consider it among consumer staples stocks to buy.
PepsiCo (PEP)
PepsiCo (NASDAQ:PEP), renowned globally for its iconic soda, holds the prestigious title of the largest food processor operating in the U.S. market. While the company’s shares are down more than 4.8% year-to-date (YTD) since the beginning of the year, there are promising signs of a positive shift on the horizon.
In a clear display of this potential turnaround, PepsiCo reported a remarkable 6.7% increase in YOY sales, reaching a massive $23.45 billion in its most recent quarter. Moreover, this financial strength is underscored further by the company’s non-GAAP EPS of $2.25, surpassing analyst expectations by an impressive 10 cents. These stellar financial results demonstrate PepsiCo’s resilience and powerful health across its diverse business endeavors.
Notably, PepsiCo holds the esteemed status of being a “Dividend Aristocrat,” having consistently raised its dividend payments for over 25 consecutive years. With its strong financial performance and growth trajectory, PepsiCo is well-positioned to continue delivering value to its shareholders and navigating the tricky consumer landscape.
Philip Morris (PM)
Philip Morris (NYSE:PM) International is a compelling bargain stock to consider with significant potential. It recently demonstrated its financial prowess in the third quarter, reporting impressive currency-neutral growth with an EPS of $1.32, marking a remarkable growth rate of 20.3%. Looking forward, PMI has set ambitious targets for the full year, and it projects continued growth within the range of 10% to 10.5%.
Tipranks analysts are optimistic, offering a 14% upside potential from the current price levels and assigning a Moderate Buy rating to the stock. This positive outlook comes despite the global decline in smoking prevalence over the past several years. However, it’s worth noting that in many countries, smoking rates remain stable or have been elevated. Additionally, Philip Morris is actively developing heat-not-burn products and other alternative devices to offset these losses. Hence, as a consistently profitable enterprise, Philip Morris warrants a second look from investors, even in the face of controversy.
PG&E (PCG)
In a year marked by notable declines in utility stocks, PG&E (NYSE:PCG) emerged as a noteworthy exception. Despite the headwinds, PG&E has made significant strides, particularly with its recent success in extending the Diablo Canyon nuclear plant’s lifespan. This positions it as a frontrunner in California’s clean energy initiative. Moreover, PG&E’s venture into nuclear energy highlights its pivotal role in shaping California’s energy future. The company’s stock has seen a commendable uptick of 12%, outpacing the sector’s median growth of 6.9%. This performance is indicative of PG&E’s resilience and adaptability in a challenging economic landscape.
Additionally, the company’s declaration of a cash dividend for the first time since 2017 signals a return to stability and reliability. The company’s journey, however, hasn’t been without its fair share of challenges. Regulatory hurdles and rate cap issues loom, necessitating a careful balancing act between operational costs and sustainable energy solutions. Nevertheless, the company’s trajectory suggests a bright future ahead, underscored by its adaptability and commitment to sustainable energy.
Anheuser-Busch (BUD)
Last on the list of consumer staples stocks to buy is Anheuser-Busch (NYSE:BUD). It has proven to be remarkably resilient in the face of multiple challenges, marked by a strong 5% top-line growth in its third quarter to $15.57 billion, despite a 3.4% decrease in overall volume. Moreover, the sales boost, mainly driven by effective pricing strategies and premiumization efforts, points to a robust recovery trajectory. The initiation of a $1 billion share buyback program, along with a $3 billion bond tender offer, underscores the firm’s commitment to lowering debt and improving shareholder value.
Furthermore, top analysts at HSBC, including Jeremy Fialko, Carlos Laboy, and Sameer Lam, maintain a positive outlook for ABI in 2024, citing stability in the consumer staples sector, growth in key markets such as Latin America, and ongoing brand transformation. Despite facing hurdles in the U.S. market, particularly with Bud Light, ABI’s issues appear to be factored into its current price, with potential for strong gains.
On the date of publication, Muslim Farooque 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.
