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5 Safe Stocks to Buy Amid Plummeting Consumer Sentiment
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Wall Street has so far had a great November following the Federal Reserve’s decision to keep interest rates unchanged for the second straight time in its recently concluded FOMC meeting. However, consumer sentiment has continued to plummet as fears of an impending recession continue to haunt investors.
Given this situation, investing in stocks from the defensive sector, such as CenterPoint Energy, Inc. (CNP - Free Report) , NiSource Inc. (NI - Free Report) , Consolidated Edison, Inc. (ED - Free Report) PepsiCo, Inc. (PEP - Free Report) , andThe Procter & Gamble Company (PG - Free Report) would be a safe bet.
Consumer Sentiment Declines
The University of Michigan's preliminary reading of its Consumer Sentiment Index fell to 60.4 in November from October's final reading of 63.8, recording the fourth straight month of decline. This is also the lowest level since May 2023.
The Present Situation Index, which is the preliminary gauge of consumers' evaluation of current business and labor market conditions, declined to 65.7 in November from 70.6 in October.
The Expectations Index, which is a gauge of consumers' short-term outlook for income, business and labor market conditions, dropped to 56.9 in November from October’s final reading of 59.3. Both these sub-indexes have now hit their lowest levels since May.
Also, expectations for the one-year inflation rate surged to 4,4%, increasing from October’s 4.2% and 3.2% in September, representing the highest level since May.
The long-term inflation expectations for the next five years rose to 3.2% in November, up from 3% in October, the highest level since March 2011.
Wall Street rallied in the first seven months of the year before stocks nosedived in August as worries of recession continued to rattle markets. The volatility continued through October till markets bounced back in November after the Fed decided to keep interest rates unaltered to its current range of 5.25-5.5%.
Also, the latest jobs data hinted at a cooling labor market, which raised hopes that the Fed may be done with its monetary tightening campaign. This sent stocks on a rally.
However, interest rates are already quite high and inflation is well above the Fed’s 2% target range. Last week, Fed Chair Jerome Powell maintained his hawkish stance and said that the central bank could go for more interest hikes as inflation remains elevated.
This once again raised concerns of a slowing economy, with stocks taking a hit. The volatility is likely to persist for a longer period, at least till the Fed finally takes a call on when to end its interest rate hike cycle.
Our Choices
To secure one's portfolio, we have narrowed our search to five stocks from the consumer staples stocks. Also, these 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.
CenterPoint Energy, Inc. is a domestic energy delivery company that provides electric transmission & distribution, natural gas distribution and competitive natural gas sales and services operations. CNP maintains wires, poles and electric infrastructure, serving more than 2.5 million metered customers in the greater Houston area and southwestern Indiana.
CenterPoint Energy has an expected earnings growth rate of 8.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 60 days. CNP currently has a Zacks Rank #2. CenterPoint Energy has a beta of 0.90 and a current dividend yield of 2.80%.
NiSource Inc., together with its subsidiaries, provides natural gas, electricity and other products and services in the United States. NI’s operating subsidiaries deliver energy to roughly 3.7 million customers in six states — Ohio, Pennsylvania, Virginia, Kentucky, Maryland and Indiana. NiSource has one of the nation’s largest natural gas distribution networks as measured by a number of customers.
NiSource has an expected earnings growth rate of 8.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 60 days. NI presently has a Zacks Rank #2. NiSource has a beta of 0.51 and a current dividend yield of 4%.
Consolidated Edison, Inc. is a diversified utility holding company with subsidiaries engaged in both regulated and unregulated businesses. ED’s regulated businesses operate through its subsidiaries — Consolidated Edison Company of New York (CECONY), Orange and Rockland Utilities (O&R), Con Edison Clean Energy Businesses, Inc. and Con Edison Transmission, Inc.
Consolidated Edisonhas an expected earnings growth rate of 7.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 60 days. ED presently has a Zacks Rank #2. Consolidated Edisonhas a beta of 0.38 and a current dividend yield of 3.63%.
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 0.57 and a current dividend yield of 3.03%.
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 8.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 60 days. PG currently has a Zacks Rank #2. The Procter & Gamble Company has a beta of 0.47 and a current dividend yield of 2.49%.
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5 Safe Stocks to Buy Amid Plummeting Consumer Sentiment
Wall Street has so far had a great November following the Federal Reserve’s decision to keep interest rates unchanged for the second straight time in its recently concluded FOMC meeting. However, consumer sentiment has continued to plummet as fears of an impending recession continue to haunt investors.
Given this situation, investing in stocks from the defensive sector, such as CenterPoint Energy, Inc. (CNP - Free Report) , NiSource Inc. (NI - Free Report) , Consolidated Edison, Inc. (ED - Free Report) PepsiCo, Inc. (PEP - Free Report) , andThe Procter & Gamble Company (PG - Free Report) would be a safe bet.
Consumer Sentiment Declines
The University of Michigan's preliminary reading of its Consumer Sentiment Index fell to 60.4 in November from October's final reading of 63.8, recording the fourth straight month of decline. This is also the lowest level since May 2023.
The Present Situation Index, which is the preliminary gauge of consumers' evaluation of current business and labor market conditions, declined to 65.7 in November from 70.6 in October.
The Expectations Index, which is a gauge of consumers' short-term outlook for income, business and labor market conditions, dropped to 56.9 in November from October’s final reading of 59.3. Both these sub-indexes have now hit their lowest levels since May.
Also, expectations for the one-year inflation rate surged to 4,4%, increasing from October’s 4.2% and 3.2% in September, representing the highest level since May.
The long-term inflation expectations for the next five years rose to 3.2% in November, up from 3% in October, the highest level since March 2011.
Wall Street rallied in the first seven months of the year before stocks nosedived in August as worries of recession continued to rattle markets. The volatility continued through October till markets bounced back in November after the Fed decided to keep interest rates unaltered to its current range of 5.25-5.5%.
Also, the latest jobs data hinted at a cooling labor market, which raised hopes that the Fed may be done with its monetary tightening campaign. This sent stocks on a rally.
However, interest rates are already quite high and inflation is well above the Fed’s 2% target range. Last week, Fed Chair Jerome Powell maintained his hawkish stance and said that the central bank could go for more interest hikes as inflation remains elevated.
This once again raised concerns of a slowing economy, with stocks taking a hit. The volatility is likely to persist for a longer period, at least till the Fed finally takes a call on when to end its interest rate hike cycle.
Our Choices
To secure one's portfolio, we have narrowed our search to five stocks from the consumer staples stocks. Also, these 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.
CenterPoint Energy, Inc. is a domestic energy delivery company that provides electric transmission & distribution, natural gas distribution and competitive natural gas sales and services operations. CNP maintains wires, poles and electric infrastructure, serving more than 2.5 million metered customers in the greater Houston area and southwestern Indiana.
CenterPoint Energy has an expected earnings growth rate of 8.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 60 days. CNP currently has a Zacks Rank #2. CenterPoint Energy has a beta of 0.90 and a current dividend yield of 2.80%.
NiSource Inc., together with its subsidiaries, provides natural gas, electricity and other products and services in the United States. NI’s operating subsidiaries deliver energy to roughly 3.7 million customers in six states — Ohio, Pennsylvania, Virginia, Kentucky, Maryland and Indiana. NiSource has one of the nation’s largest natural gas distribution networks as measured by a number of customers.
NiSource has an expected earnings growth rate of 8.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 60 days. NI presently has a Zacks Rank #2. NiSource has a beta of 0.51 and a current dividend yield of 4%.
Consolidated Edison, Inc. is a diversified utility holding company with subsidiaries engaged in both regulated and unregulated businesses. ED’s regulated businesses operate through its subsidiaries — Consolidated Edison Company of New York (CECONY), Orange and Rockland Utilities (O&R), Con Edison Clean Energy Businesses, Inc. and Con Edison Transmission, Inc.
Consolidated Edisonhas an expected earnings growth rate of 7.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 60 days. ED presently has a Zacks Rank #2. Consolidated Edisonhas a beta of 0.38 and a current dividend yield of 3.63%.
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 0.57 and a current dividend yield of 3.03%.
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 8.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 60 days. PG currently has a Zacks Rank #2. The Procter & Gamble Company has a beta of 0.47 and a current dividend yield of 2.49%.