We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
4 Safe Stocks to Buy as Consumer Sentiment Continues to Plummet
Read MoreHide Full Article
Wall Street has been volatile over the past three months as investors are scrambling to find direction amid growing concerns of a recession, with the Fed indicating another interest rate hike this year.
Consumer sentiment also has continued to plummet, reflecting uncertainty in the minds of consumers about the economy’s health. Given this situation, investing in stocks such as PepsiCo, Inc. (PEP - Free Report) , The J. M. Smucker Company (SJM - Free Report) , The Procter & Gamble Company (PG - Free Report) and Lamb Weston Holdings, Inc. (LW - Free Report) from the defensive sector should be safe.
Consumer Sentiment Tumbles
The preliminary reading for consumer sentiment in October came in at 63, missing the consensus estimate of 67.4, the University of Michigan reported earlier this month. This follows the final reading for September which came in at 68.1.
Consumer sentiment has now declined for the third straight month, marking the longest stretch since May.
The Present Situation Index, which reflects consumers' evaluations of current business and labor market conditions, dropped from 71.4 in September to 66.7 in October.
Also, the Expectations Index, which represents consumers' short-term outlook for income, business, and labor market conditions, decreased from 66 in the previous month to 60.7 in October. Both of these indexes have now reached their lowest points since May.
Meanwhile, expectations for the one-year inflation rate jumped to 3.8% in October, up from 3.2% in September, marking the highest level since May. Also, the 5-year long-term inflation expectations rose to 3% in October from 2.8% in September.
U.S. GDP grew at a solid 4.9% annualized clip in the third quarter, surpassing the consensus estimate of a rise of 4.7%, the Commerce Department reported on Oct 26. However, this didn’t help the markets much as all three major indexes tumbled on Thursday once again.
Understandably, consumers are worried about the economy’s health as the Fed said that inflation, despite declining sharply from its peak of 9.1% in June 2022, remains elevated and a lot higher than its 2% target.
The Fed left its benchmark interest rates unchanged in its September FOMC meeting in the current range of 5.25-5.5% after hiking rates by 525 basis points since March 2022.
However, Federal Reserve Chair Jerome Powell also said that another rate hike by 25 basis points would be required this year. Moreover, the central bank also revised its rate cut forecast from four to two in 2024, which means that the higher interest rates will stay for a longer period than projected earlier.
Our Choices
To secure one's portfolio, we have thus narrowed our search to four stocks from the consumer staples stocks. Also, these stocks belong to the category of low-beta stocks (beta greater than 0 but less than 1). Hence, the recommended approach is to invest in low-beta stocks with a high dividend yield and a favorable Zacks Rank. Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PepsiCo, Inc. is one of the leading global food and beverage companies. PEP’s complementary brands/businesses include Frito-Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods. PepsiCo serves customers in more than 200 countries and territories.
PepsiCo has an expected earnings growth rate of 11.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the last 60 days. PEP currently has a Zacks Rank #2. PepsiCo has a beta of 0.55 and a current dividend yield of 3.12%.
The J. M. Smucker Company is a leading marketer and manufacturer of consumer food and beverage products and pet food and pet snacks in North America. SJM boasts a strong portfolio of iconic food and beverages. The J. M. Smucker Companymainly caters to coffee, pet food, peanut butter, fruit spreads, baking products, ready-to-spread frostings, frozen sandwiches, flour, juices and beverages, and portion control products.
The J. M. Smucker Company has an expected earnings growth rate of 8.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the last 60 days. SJM currently has a Zacks Rank #2. The J. M. Smucker Company has a beta of 0.28 and a current dividend yield of 3.70%.
The Procter & Gamble Company is a branded consumer products company that markets its products in more than 180 countries primarily through mass merchandisers, grocery stores, membership club stores, drug stores, department stores, distributors, baby stores, specialty beauty stores, e-commerce, high frequency stores and pharmacies. PG has operations in approximately 70 countries.
The Procter & Gamble Company has an expected earnings growth rate of 8.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days. PG currently has a Zacks Rank #2. The Procter & Gamble Company has a beta of 0.4 and a current dividend yield of 2.50%.
Lamb Weston Holdings, Inc. is a leading global manufacturer, marketer and distributor of value-added frozen potato products, particularly French fries, and provides a range of appetizers. LW, along with its joint venture allies, is the top frozen potato products supplier in North America, while it also operates internationally, with a robust and growing presence in emerging markets.
Lamb Weston’s expected earnings growth rate for the current year is 24.8%. The Zacks Consensus Estimate for the current-year earnings has improved 12.1% over the past 60 days. LW currently has a Zacks Rank #2. Lamb Weston has a beta of 0.55 and a current dividend yield of 1.26%.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
4 Safe Stocks to Buy as Consumer Sentiment Continues to Plummet
Wall Street has been volatile over the past three months as investors are scrambling to find direction amid growing concerns of a recession, with the Fed indicating another interest rate hike this year.
Consumer sentiment also has continued to plummet, reflecting uncertainty in the minds of consumers about the economy’s health. Given this situation, investing in stocks such as PepsiCo, Inc. (PEP - Free Report) , The J. M. Smucker Company (SJM - Free Report) , The Procter & Gamble Company (PG - Free Report) and Lamb Weston Holdings, Inc. (LW - Free Report) from the defensive sector should be safe.
Consumer Sentiment Tumbles
The preliminary reading for consumer sentiment in October came in at 63, missing the consensus estimate of 67.4, the University of Michigan reported earlier this month. This follows the final reading for September which came in at 68.1.
Consumer sentiment has now declined for the third straight month, marking the longest stretch since May.
The Present Situation Index, which reflects consumers' evaluations of current business and labor market conditions, dropped from 71.4 in September to 66.7 in October.
Also, the Expectations Index, which represents consumers' short-term outlook for income, business, and labor market conditions, decreased from 66 in the previous month to 60.7 in October. Both of these indexes have now reached their lowest points since May.
Meanwhile, expectations for the one-year inflation rate jumped to 3.8% in October, up from 3.2% in September, marking the highest level since May. Also, the 5-year long-term inflation expectations rose to 3% in October from 2.8% in September.
U.S. GDP grew at a solid 4.9% annualized clip in the third quarter, surpassing the consensus estimate of a rise of 4.7%, the Commerce Department reported on Oct 26. However, this didn’t help the markets much as all three major indexes tumbled on Thursday once again.
Understandably, consumers are worried about the economy’s health as the Fed said that inflation, despite declining sharply from its peak of 9.1% in June 2022, remains elevated and a lot higher than its 2% target.
The Fed left its benchmark interest rates unchanged in its September FOMC meeting in the current range of 5.25-5.5% after hiking rates by 525 basis points since March 2022.
However, Federal Reserve Chair Jerome Powell also said that another rate hike by 25 basis points would be required this year. Moreover, the central bank also revised its rate cut forecast from four to two in 2024, which means that the higher interest rates will stay for a longer period than projected earlier.
Our Choices
To secure one's portfolio, we have thus narrowed our search to four stocks from the consumer staples stocks. Also, these stocks belong to the category of low-beta stocks (beta greater than 0 but less than 1). Hence, the recommended approach is to invest in low-beta stocks with a high dividend yield and a favorable Zacks Rank. Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PepsiCo, Inc. is one of the leading global food and beverage companies. PEP’s complementary brands/businesses include Frito-Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods. PepsiCo serves customers in more than 200 countries and territories.
PepsiCo has an expected earnings growth rate of 11.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the last 60 days. PEP currently has a Zacks Rank #2. PepsiCo has a beta of 0.55 and a current dividend yield of 3.12%.
The J. M. Smucker Company is a leading marketer and manufacturer of consumer food and beverage products and pet food and pet snacks in North America. SJM boasts a strong portfolio of iconic food and beverages. The J. M. Smucker Companymainly caters to coffee, pet food, peanut butter, fruit spreads, baking products, ready-to-spread frostings, frozen sandwiches, flour, juices and beverages, and portion control products.
The J. M. Smucker Company has an expected earnings growth rate of 8.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the last 60 days. SJM currently has a Zacks Rank #2. The J. M. Smucker Company has a beta of 0.28 and a current dividend yield of 3.70%.
The Procter & Gamble Company is a branded consumer products company that markets its products in more than 180 countries primarily through mass merchandisers, grocery stores, membership club stores, drug stores, department stores, distributors, baby stores, specialty beauty stores, e-commerce, high frequency stores and pharmacies. PG has operations in approximately 70 countries.
The Procter & Gamble Company has an expected earnings growth rate of 8.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days. PG currently has a Zacks Rank #2. The Procter & Gamble Company has a beta of 0.4 and a current dividend yield of 2.50%.
Lamb Weston Holdings, Inc. is a leading global manufacturer, marketer and distributor of value-added frozen potato products, particularly French fries, and provides a range of appetizers. LW, along with its joint venture allies, is the top frozen potato products supplier in North America, while it also operates internationally, with a robust and growing presence in emerging markets.
Lamb Weston’s expected earnings growth rate for the current year is 24.8%. The Zacks Consensus Estimate for the current-year earnings has improved 12.1% over the past 60 days. LW currently has a Zacks Rank #2. Lamb Weston has a beta of 0.55 and a current dividend yield of 1.26%.