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3 Defensive Consumer Staple Stocks for Your Portfolio
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An overall inflationary landscape and disrupted supply chain have been bad news for companies across most sectors. High input costs, including the cost of raw materials, packaging and logistics, are a common concern plaguing margins. Also, a tight labor market has led to a spike in wage costs. These headwinds have been weighing on companies’ performances.
Amid such a scenario, the Consumer Staples sector – popularly known as the defensive zone – has been garnering attention. This is because demand for staples remains fairly stable when compared with discretionary categories, aiding companies in the space to withstand market turbulence. Even in the early phases of the pandemic, which had messed up operations of companies across most industries, players in the consumer staples space were riding on the burgeoning demand for essentials stemming from elevated at-home consumption and stock hoarding.
No wonder the defensive Consumer Staples sector has always been a go-to place for investors, as it offers steady growth irrespective of the state of the economy. Adding stocks from the consumer staples basket lends more stability to portfolios in an uncertain market. These stocks make up for modest growth with dependable profits, lower price volatility and defensive positioning.
All said, we have picked a few stocks from the Zacks Consumer Staples universe, which are well-positioned for growth on the back of their robust fundamentals and favorable demand. These stocks sport a Zacks Rank of #1 (Strong Buy) or 2 (Buy) and carry a VGM Score of A or B.
3 Consumer Staple Stocks Worth a Shot
PepsiCo, Inc. (PEP - Free Report) : This Zacks Rank #2 company benefits from the resilience and strength of global beverage and convenient food businesses. The company has the competitive advantage of selling both snacks and beverages, which are complementary food categories. On its last earnings call, PepsiCo raised the revenue guidance for 2022. It expects organic revenue growth of 10% for 2022 compared with 8% rise mentioned earlier.
With a VGM Score of B, PEP has a long-term earnings growth expectation of 7.7%. This beverage and convenient foods company has a trailing four-quarter earnings surprise of 3.8%, on average. The Zacks Consensus Estimate for PepsiCo’s current financial year sales and earnings suggest growth of 5.6% and 6.4%, respectively, from the year-ago period. You can see the complete list of today’s Zacks #1 Rank stocks here.
Constellation Brands, Inc. (STZ - Free Report) : The alcohol beverage giant has been benefiting from strong consumer demand for its portfolio of premium, high-end products and growth in the beer business. Sales advanced 21% in the company's beer business in the first quarter of fiscal 2023, driven by robust consumer demand for its iconic brands. Constellation Brands' premiumization strategy is playing out well, as evident from the accelerated growth for Power Brands in first-quarter fiscal 2023.
Constellation Brands has a long-term earnings growth expectation of 10.8% and a VGM of A. This Zacks Rank #2 stock has a trailing four-quarter earnings surprise of 4.4%, on average. The Zacks Consensus Estimate for STZ’s current financial year sales and EPS suggests growth of 7.5% and 8.7%, respectively, from the year-ago period.
Constellation Brands Inc Price, Consensus and EPS Surprise
Fomento Economico Mexicano, S.A.B. de C.V. (FMX - Free Report) : Fomento Economico Mexicano or FEMSA has exposure in various industries, including beverage, beer and retail. FEMSA’s digital initiatives and business expansion endeavors have also been aiding results. Its efforts to expand in the U.S. specialized distribution segment bodes well. In the second quarter of 2022, FEMSA’s revenues increased year over year, driven by gains across all business units resulting from effective growth strategies and robust demand across markets.
FEMSA has a long-term earnings growth expectation of 11.4% and a VGM Score of A. This Zacks Rank #2 stock has a trailing four-quarter earnings surprise of 18.9%, on average. The Zacks Consensus Estimate for FMX’s current financial year sales suggests growth of 11.3% from the year-ago period.
Fomento Economico Mexicano S.A.B. de C.V. Price, Consensus and EPS Surprise
Image: Bigstock
3 Defensive Consumer Staple Stocks for Your Portfolio
An overall inflationary landscape and disrupted supply chain have been bad news for companies across most sectors. High input costs, including the cost of raw materials, packaging and logistics, are a common concern plaguing margins. Also, a tight labor market has led to a spike in wage costs. These headwinds have been weighing on companies’ performances.
Amid such a scenario, the Consumer Staples sector – popularly known as the defensive zone – has been garnering attention. This is because demand for staples remains fairly stable when compared with discretionary categories, aiding companies in the space to withstand market turbulence. Even in the early phases of the pandemic, which had messed up operations of companies across most industries, players in the consumer staples space were riding on the burgeoning demand for essentials stemming from elevated at-home consumption and stock hoarding.
No wonder the defensive Consumer Staples sector has always been a go-to place for investors, as it offers steady growth irrespective of the state of the economy. Adding stocks from the consumer staples basket lends more stability to portfolios in an uncertain market. These stocks make up for modest growth with dependable profits, lower price volatility and defensive positioning.
All said, we have picked a few stocks from the Zacks Consumer Staples universe, which are well-positioned for growth on the back of their robust fundamentals and favorable demand. These stocks sport a Zacks Rank of #1 (Strong Buy) or 2 (Buy) and carry a VGM Score of A or B.
3 Consumer Staple Stocks Worth a Shot
PepsiCo, Inc. (PEP - Free Report) : This Zacks Rank #2 company benefits from the resilience and strength of global beverage and convenient food businesses. The company has the competitive advantage of selling both snacks and beverages, which are complementary food categories. On its last earnings call, PepsiCo raised the revenue guidance for 2022. It expects organic revenue growth of 10% for 2022 compared with 8% rise mentioned earlier.
With a VGM Score of B, PEP has a long-term earnings growth expectation of 7.7%. This beverage and convenient foods company has a trailing four-quarter earnings surprise of 3.8%, on average. The Zacks Consensus Estimate for PepsiCo’s current financial year sales and earnings suggest growth of 5.6% and 6.4%, respectively, from the year-ago period. You can see the complete list of today’s Zacks #1 Rank stocks here.
PepsiCo, Inc. Price, Consensus and EPS Surprise
PepsiCo, Inc. price-consensus-eps-surprise-chart | PepsiCo, Inc. Quote
Constellation Brands, Inc. (STZ - Free Report) : The alcohol beverage giant has been benefiting from strong consumer demand for its portfolio of premium, high-end products and growth in the beer business. Sales advanced 21% in the company's beer business in the first quarter of fiscal 2023, driven by robust consumer demand for its iconic brands. Constellation Brands' premiumization strategy is playing out well, as evident from the accelerated growth for Power Brands in first-quarter fiscal 2023.
Constellation Brands has a long-term earnings growth expectation of 10.8% and a VGM of A. This Zacks Rank #2 stock has a trailing four-quarter earnings surprise of 4.4%, on average. The Zacks Consensus Estimate for STZ’s current financial year sales and EPS suggests growth of 7.5% and 8.7%, respectively, from the year-ago period.
Constellation Brands Inc Price, Consensus and EPS Surprise
Constellation Brands Inc price-consensus-eps-surprise-chart | Constellation Brands Inc Quote
Fomento Economico Mexicano, S.A.B. de C.V. (FMX - Free Report) : Fomento Economico Mexicano or FEMSA has exposure in various industries, including beverage, beer and retail. FEMSA’s digital initiatives and business expansion endeavors have also been aiding results. Its efforts to expand in the U.S. specialized distribution segment bodes well. In the second quarter of 2022, FEMSA’s revenues increased year over year, driven by gains across all business units resulting from effective growth strategies and robust demand across markets.
FEMSA has a long-term earnings growth expectation of 11.4% and a VGM Score of A. This Zacks Rank #2 stock has a trailing four-quarter earnings surprise of 18.9%, on average. The Zacks Consensus Estimate for FMX’s current financial year sales suggests growth of 11.3% from the year-ago period.
Fomento Economico Mexicano S.A.B. de C.V. Price, Consensus and EPS Surprise
Fomento Economico Mexicano S.A.B. de C.V. price-consensus-eps-surprise-chart | Fomento Economico Mexicano S.A.B. de C.V. Quote