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4 Consumer Staples Value Stocks to Survive the Brexit Storm
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Amid a host of factors plaguing the global economy, including the timing of the Fed rate hike, the uncertainty surrounding Brexit raises concerns.
The Brexit debate is all about whether the UK will opt to remain or leave the European Union (EU) after voting in a referendum on Jun 23.
Recently, several polls showed that though most of the voters are in favor of Brexit, a significant number of them are still unsure. Some of the most important issues include trade, immigration, and the costs associated with being an EU member. (Read: The 3 Largest Issues Surrounding the UK's Potential Brexit). However, there are also solid counter arguments against Brexit.
In any case, it is certain that Brexit will have a rippling effect in the economy. The upcoming EU referendum has the potential to impact securities including stocks, ETFs and mutual funds with significant exposure to the UK. Meanwhile, several leaders from Germany, Ireland, the Netherlands, Spain and other EU countries have issued warnings about the economic consequences of Brexit. Apart from that, the Federal Reserve chair Janet Yellen has warned that Brexit could have significant economic repercussions for the U.S.
Amid the prevailing macroeconomic challenges, we believe investing in the consumer staples stocks is safe because of their defensive nature. So let us look at some companies in the consumer staples sector that are well positioned and have the potential to offer great value to the investors.
Four Consumer Staples Stocks to Bank On
With the help of our new style score system, we have identified four consumer staples stocks that have excellent prospects and might prove to be profitable for long-term investors.
Our Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best upside potential.
To arrive at the best value picks, we have shortlisted those consumer staple stocks that either have a Zacks Rank #1 or #2 with a Value Style Score of ‘A’ and finally zeroed in on four stocks that can offer great value to investors.
We suggest investing in Dean Foods Company , which carries a Zacks Rank #1 and generates a dividend yield of 2.02%. Dallas, TX-based company processes and distributes milk, and other dairy and dairy case products in the United States; and has posted positive earnings surprise in all the four quarters, delivering an average surprise of 17.81%.
Estimates, especially for full year 2016 and 2017, have largely been moving upward since the company reported strong first-quarter 2016 results wherein both the top and bottom lines beat the Zacks Consensus Estimate, and earnings also exceeded management’s guidance. Results mainly benefited from lower milk costs and robust execution across all business operations. The company remains impressed with its progress, given its solid operational and financial results, and is optimistic about carrying this momentum forward in the future.
The stock looks attractive with a forward P/E multiple of 11.60x, lower than the industry average of 26.50x. Also, it has a long term EPS growth rate of 12.00%.
Houston-based Omega Protein Corp. holds a Zacks Rank #2 and has a long term EPS growth rate of 8.00%. It is one of the nation's leading producers of edible fish oil.
It trades at a forward P/E (price-to-earnings) of 11.96x, which is favorable compared with the S&P average of 17.50x. Further, Omega Protein has posted positive earnings surprise in three of the last four quarters, delivering an average positive surprise of 25.04%.
Springdale, AR-based Tyson Foods, Inc. (TSN - Free Report) is also a good value pick. Tyson Foods is the world's largest fully-integrated producer, processor and marketer of chicken and poultry-based food products. Tyson offers a wide array of meat products and enhances its portfolio through innovation and acquisitions. Its sales boosting initiatives and strong international presence are also appealing. The company has delivered an average positive earnings surprise of 5.02% in the four trailing quarters. Estimates for fiscal 2016 and 2017 have been largely moving upward over the last 60 days.
The stock also looks attractive with a forward P/E multiple of 13.98x, lower than the industry average of 17.00x and S&P average of 17.50x.
With an attractive Zacks Rank #2, dividend yield of 0.99% and a long term EPS growth rate of 11%, this stock is a hot pick for investors.
Rhode Island based United Natural Foods, Inc. (UNFI - Free Report) can also be considered. The company distributes and retails natural, organic, and specialty foods, as well as non-food products primarily in the United States and Canada.
This Zacks Rank #1 company has delivered an average positive earnings surprise of 2.13% in the four trailing quarters and the results were driven by a continuous increase in demand for the company’s organic and natural food products and robust acquisitions. Last week, this specialty foods distributor posted better-than-expected earnings in the third quarter of fiscal 2016 and raised its outlook for fiscal 2016. Estimates have also risen sharply over the past 7 days for fiscal 2016 and fiscal 2017 since the company reported solid third quarter results. The stock offers a long term EPS growth rate of 8.73%.
Bottom Line
We believe investing in these stocks can prove to be valuable additions to investors’ portfolio.
You can use the Zacks Stock Screener to find other stocks with this winning combination. Investors can confidently end their search at stocks with a favorable Zacks Rank of either #1 or #2, which encompasses its strong fundamentals, promises price movement and highlights analysts’ constructive view on the same via positive estimate revisions. A sturdy portfolio always gives favorable returns.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
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4 Consumer Staples Value Stocks to Survive the Brexit Storm
Amid a host of factors plaguing the global economy, including the timing of the Fed rate hike, the uncertainty surrounding Brexit raises concerns.
The Brexit debate is all about whether the UK will opt to remain or leave the European Union (EU) after voting in a referendum on Jun 23.
Recently, several polls showed that though most of the voters are in favor of Brexit, a significant number of them are still unsure. Some of the most important issues include trade, immigration, and the costs associated with being an EU member. (Read: The 3 Largest Issues Surrounding the UK's Potential Brexit). However, there are also solid counter arguments against Brexit.
In any case, it is certain that Brexit will have a rippling effect in the economy. The upcoming EU referendum has the potential to impact securities including stocks, ETFs and mutual funds with significant exposure to the UK. Meanwhile, several leaders from Germany, Ireland, the Netherlands, Spain and other EU countries have issued warnings about the economic consequences of Brexit. Apart from that, the Federal Reserve chair Janet Yellen has warned that Brexit could have significant economic repercussions for the U.S.
Amid the prevailing macroeconomic challenges, we believe investing in the consumer staples stocks is safe because of their defensive nature. So let us look at some companies in the consumer staples sector that are well positioned and have the potential to offer great value to the investors.
Four Consumer Staples Stocks to Bank On
With the help of our new style score system, we have identified four consumer staples stocks that have excellent prospects and might prove to be profitable for long-term investors.
Our Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best upside potential.
To arrive at the best value picks, we have shortlisted those consumer staple stocks that either have a Zacks Rank #1 or #2 with a Value Style Score of ‘A’ and finally zeroed in on four stocks that can offer great value to investors.
We suggest investing in Dean Foods Company , which carries a Zacks Rank #1 and generates a dividend yield of 2.02%. Dallas, TX-based company processes and distributes milk, and other dairy and dairy case products in the United States; and has posted positive earnings surprise in all the four quarters, delivering an average surprise of 17.81%.
Estimates, especially for full year 2016 and 2017, have largely been moving upward since the company reported strong first-quarter 2016 results wherein both the top and bottom lines beat the Zacks Consensus Estimate, and earnings also exceeded management’s guidance. Results mainly benefited from lower milk costs and robust execution across all business operations. The company remains impressed with its progress, given its solid operational and financial results, and is optimistic about carrying this momentum forward in the future.
The stock looks attractive with a forward P/E multiple of 11.60x, lower than the industry average of 26.50x. Also, it has a long term EPS growth rate of 12.00%.
Houston-based Omega Protein Corp. holds a Zacks Rank #2 and has a long term EPS growth rate of 8.00%. It is one of the nation's leading producers of edible fish oil.
It trades at a forward P/E (price-to-earnings) of 11.96x, which is favorable compared with the S&P average of 17.50x. Further, Omega Protein has posted positive earnings surprise in three of the last four quarters, delivering an average positive surprise of 25.04%.
Springdale, AR-based Tyson Foods, Inc. (TSN - Free Report) is also a good value pick. Tyson Foods is the world's largest fully-integrated producer, processor and marketer of chicken and poultry-based food products. Tyson offers a wide array of meat products and enhances its portfolio through innovation and acquisitions. Its sales boosting initiatives and strong international presence are also appealing. The company has delivered an average positive earnings surprise of 5.02% in the four trailing quarters. Estimates for fiscal 2016 and 2017 have been largely moving upward over the last 60 days.
The stock also looks attractive with a forward P/E multiple of 13.98x, lower than the industry average of 17.00x and S&P average of 17.50x.
With an attractive Zacks Rank #2, dividend yield of 0.99% and a long term EPS growth rate of 11%, this stock is a hot pick for investors.
Rhode Island based United Natural Foods, Inc. (UNFI - Free Report) can also be considered. The company distributes and retails natural, organic, and specialty foods, as well as non-food products primarily in the United States and Canada.
This Zacks Rank #1 company has delivered an average positive earnings surprise of 2.13% in the four trailing quarters and the results were driven by a continuous increase in demand for the company’s organic and natural food products and robust acquisitions. Last week, this specialty foods distributor posted better-than-expected earnings in the third quarter of fiscal 2016 and raised its outlook for fiscal 2016. Estimates have also risen sharply over the past 7 days for fiscal 2016 and fiscal 2017 since the company reported solid third quarter results. The stock offers a long term EPS growth rate of 8.73%.
Bottom Line
We believe investing in these stocks can prove to be valuable additions to investors’ portfolio.
You can use the Zacks Stock Screener to find other stocks with this winning combination. Investors can confidently end their search at stocks with a favorable Zacks Rank of either #1 or #2, which encompasses its strong fundamentals, promises price movement and highlights analysts’ constructive view on the same via positive estimate revisions. A sturdy portfolio always gives favorable returns.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>