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Top 5 High-Flying Consumer Staples Stocks With More Upside
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Wall Street has enjoyed an impressive bull run for two months after completing a terrible first half of 2022. However, the rally has halted as market participants remain concerned about Fed’s near-term policies and the trajectory of the Fed Fund rate’s movement.
Volatility may remain on Wall Street as part of daily trading in the near future. At this stage, it will be prudent to stay invested in defensive stocks from the consumer staples sector as these are less volatile in the market’s downtrend. Five such stocks with a favorable Zacks Rank are — Archer-Daniels-Midland Co. (ADM - Free Report) , Campbell Soup Co. (CPB - Free Report) , Celsius Holdings Inc. (CELH - Free Report) , Corteva Inc. (CTVA - Free Report) and The Hershey Co. (HSY - Free Report) .
Consumer Staples Immune to the Vagaries of Economic Cycle
The consumer staples sector is mature and fundamentally strong as demand for such services is generally immune to the changes in the economic cycle. The consumer staples sector includes companies that provide necessities and products for daily use. This makes the sector defensive in nature.
Therefore, this has always been a go-to place for investors, who want to play it safe during extreme market fluctuations irrespective of internal or external disturbances. Moreover, the sector is known for the stability and visibility of its earnings and cash flows. Consequently, adding stocks from the consumer staples basket lends more stability to portfolios in an uncertain market.
Historically, September is recognized as the worst performing month on Wall Street followed by October. The U.S. stock markets may remain soft in the next two months. As a result, investment in consumer staple stocks make sense.
Our Top Picks
We have narrowed our search to five consumer staples stocks that have popped year to date with more potential for the rest of 2022. These stocks have seen positive earnings estimate revisions in the last 30 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Archer-Daniels-Midland has been gaining from solid demand, improved productivity and product innovations. Persistent growth in the Nutrition segment of ADM, driven by significant gains in the Human and Animal Nutrition units, remained the key growth drivers.
Archer-Daniels-Midland expects the nutrition segment’s operating profit growth of 20% in 2022. The company has been significantly progressing on its three strategic pillars — optimize, drive and growth.
Archer-Daniels-Midland has an expected earnings growth rate of 30.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 7.1% over the last 30 days. The stock price of ADM has jumped 31.1% year to date. It has a current dividend yield of 1.82%.
Corteva operates in the agriculture business. CTVA operates through two segments, Seed and Crop Protection. Corteva develops and supplies germplasm and traits in corn, soybean and sunflower seed markets. CTVA also supplies products to the agricultural input industry that protects against weeds, insects and other pests, and diseases as well as enhances crop health.
Corteva has an expected earnings growth rate of 20% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the last 60 days. The stock price of CTVA has climbed 30.9% year to date. It has a current dividend yield of 1%.
The Hershey is benefiting from solid consumer demand due to sustained at-home consumption. Higher prices, improved volumes and contributions from buyouts drove HSY’s performance. The buyouts of Pretzels, Dot's and Lily's boosted net sales by 4.6 points.
Management expects pricing to remain strong in 2022. Also, Hershey is gaining on its focus on innovation and capacity expansion. HSY raised its top and bottom-line view supported by a greater visibility in 2022.
Hershey has an expected earnings growth rate of 14.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 7 days. The stock price of HSY has advanced 20.6% year to date. It has a current dividend yield of 1.78%.
Campbell Soup manufactures and markets food and beverage products. CPB’s pricing actions, supply chain productivity improvements as well as cost-saving initiatives have been aiding amid a rising cost scenario.
Robust pricing; supply-chain productivity and cost-saving efforts, and a better labor outlook and easier year-over-year comparisons, are likely to lead to margin progress and earnings recovery in the second half of fiscal 2022. Apart from this, Campbell Soup is benefiting from strength in its Snacks business, as well as focus on core strategies like innovation.
Campbell Soup has an expected earnings growth rate of 3% for next year (ending July 2023). The Zacks Consensus Estimate for next-year earnings has improved 0.3% over the last 7 days. The stock price of CPB has surged 18.6% year to date. It has a current dividend yield of 2.89%.
Celsius Holdings specializes in commercializing healthier, nutritional functional foods, beverages and dietary supplements. CELH sells its products through grocery, drug, convenience, club and mass, and health and fitness channels. Celsius Holdings’ products are produced in Mooresville, NC, and Monroe, WI. CELH serves customers in the United States and internationally.
Celsius Holdings has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for next-year earnings has improved 9.2% over the last 30 days. The stock price of CELH has rallied 52.3% year to date.
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Top 5 High-Flying Consumer Staples Stocks With More Upside
Wall Street has enjoyed an impressive bull run for two months after completing a terrible first half of 2022. However, the rally has halted as market participants remain concerned about Fed’s near-term policies and the trajectory of the Fed Fund rate’s movement.
Volatility may remain on Wall Street as part of daily trading in the near future. At this stage, it will be prudent to stay invested in defensive stocks from the consumer staples sector as these are less volatile in the market’s downtrend. Five such stocks with a favorable Zacks Rank are — Archer-Daniels-Midland Co. (ADM - Free Report) , Campbell Soup Co. (CPB - Free Report) , Celsius Holdings Inc. (CELH - Free Report) , Corteva Inc. (CTVA - Free Report) and The Hershey Co. (HSY - Free Report) .
Consumer Staples Immune to the Vagaries of Economic Cycle
The consumer staples sector is mature and fundamentally strong as demand for such services is generally immune to the changes in the economic cycle. The consumer staples sector includes companies that provide necessities and products for daily use. This makes the sector defensive in nature.
Therefore, this has always been a go-to place for investors, who want to play it safe during extreme market fluctuations irrespective of internal or external disturbances. Moreover, the sector is known for the stability and visibility of its earnings and cash flows. Consequently, adding stocks from the consumer staples basket lends more stability to portfolios in an uncertain market.
Historically, September is recognized as the worst performing month on Wall Street followed by October. The U.S. stock markets may remain soft in the next two months. As a result, investment in consumer staple stocks make sense.
Our Top Picks
We have narrowed our search to five consumer staples stocks that have popped year to date with more potential for the rest of 2022. These stocks have seen positive earnings estimate revisions in the last 30 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Archer-Daniels-Midland has been gaining from solid demand, improved productivity and product innovations. Persistent growth in the Nutrition segment of ADM, driven by significant gains in the Human and Animal Nutrition units, remained the key growth drivers.
Archer-Daniels-Midland expects the nutrition segment’s operating profit growth of 20% in 2022. The company has been significantly progressing on its three strategic pillars — optimize, drive and growth.
Archer-Daniels-Midland has an expected earnings growth rate of 30.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 7.1% over the last 30 days. The stock price of ADM has jumped 31.1% year to date. It has a current dividend yield of 1.82%.
Corteva operates in the agriculture business. CTVA operates through two segments, Seed and Crop Protection. Corteva develops and supplies germplasm and traits in corn, soybean and sunflower seed markets. CTVA also supplies products to the agricultural input industry that protects against weeds, insects and other pests, and diseases as well as enhances crop health.
Corteva has an expected earnings growth rate of 20% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the last 60 days. The stock price of CTVA has climbed 30.9% year to date. It has a current dividend yield of 1%.
The Hershey is benefiting from solid consumer demand due to sustained at-home consumption. Higher prices, improved volumes and contributions from buyouts drove HSY’s performance. The buyouts of Pretzels, Dot's and Lily's boosted net sales by 4.6 points.
Management expects pricing to remain strong in 2022. Also, Hershey is gaining on its focus on innovation and capacity expansion. HSY raised its top and bottom-line view supported by a greater visibility in 2022.
Hershey has an expected earnings growth rate of 14.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 7 days. The stock price of HSY has advanced 20.6% year to date. It has a current dividend yield of 1.78%.
Campbell Soup manufactures and markets food and beverage products. CPB’s pricing actions, supply chain productivity improvements as well as cost-saving initiatives have been aiding amid a rising cost scenario.
Robust pricing; supply-chain productivity and cost-saving efforts, and a better labor outlook and easier year-over-year comparisons, are likely to lead to margin progress and earnings recovery in the second half of fiscal 2022. Apart from this, Campbell Soup is benefiting from strength in its Snacks business, as well as focus on core strategies like innovation.
Campbell Soup has an expected earnings growth rate of 3% for next year (ending July 2023). The Zacks Consensus Estimate for next-year earnings has improved 0.3% over the last 7 days. The stock price of CPB has surged 18.6% year to date. It has a current dividend yield of 2.89%.
Celsius Holdings specializes in commercializing healthier, nutritional functional foods, beverages and dietary supplements. CELH sells its products through grocery, drug, convenience, club and mass, and health and fitness channels. Celsius Holdings’ products are produced in Mooresville, NC, and Monroe, WI. CELH serves customers in the United States and internationally.
Celsius Holdings has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for next-year earnings has improved 9.2% over the last 30 days. The stock price of CELH has rallied 52.3% year to date.