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5 Consumer Staples Stocks to Buy on Uncertainty Over Rate Cuts
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Inflation increased in the first two months of the year and investors are uncertain as to when the Federal Reserve will start its rate cuts. This has raised concerns among market participants and made markets volatile.
The Federal Reserve said at the end of last year that it would soon end its rate hike regime and go for rate cuts in 2024. This came as inflation declined sharply in 2023 after the Federal Reserve’s aggressive monetary tightening policy to curb 40-year-high inflation saw it hiking interest rates by 525 basis points since March 2022. Inflation declined sharply from its peak of 9.1% in July 2023 to 2.9% by the end of last year.
The Fed’s assurance on rate cuts raised optimism among investors as they started hoping for the first rate cut in March. However, that didn’t happen as inflation rose in January and February.
The Consumer Price Index rose 3.2% in February, which faded hopes of a rate cut in March. The Federal Reserve also said that inflation is still quite above its 2% target and dismissed chances of a rate cut anytime soon.
Last month, the Federal Reserve once again said at the end of its FOMC meeting that it still plans three rate cuts of 25 basis points each by the end of this year. However, it didn’t give a timeline for the first rate cut, which has once again made investors jittery.
According to the CME FedWatch, investors are pricing in a 56% chance of a 25 bps rate cut, earliest by June. This uncertainty could keep markets volatile for a longer period.
Our Choices
Given this situation, it would be wise to invest in five defensive consumer staples, such as Colgate-Palmolive Company (CL - Free Report) , Pilgrim's Pride Corporation (PPC - Free Report) , Mondelez International, Inc. (MDLZ - Free Report) , Molson Coors Beverage Company (TAP - Free Report) and Grocery Outlet Holding Corp. (GO - Free Report) . These have a favorable Zacks Rank and are likely to strengthen one’s portfolio. 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.
Colgate-Palmolive Company’s business strategy closely defines efforts to increase its leadership in key product categories through innovation in core businesses, tracking adjacent categories’ growth and expansion into new markets and channels. Due to the shift of consumer preference to organic and natural ingredients, CL is expanding its Naturals range, including Naturals toothpaste.
Colgate-Palmolive Company has an expected earnings growth rate of 8.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 60 days. CL presently has a Zacks Rank #2.
Pilgrim's Pride Corporation is engaged in the processing, production, marketing and distribution of frozen, fresh as well as value-added chicken products. PPC offers its services in the United States, Mexico, France, the Netherlands, Puerto Rico and Mexico through a number of distributors, retailers and food service operators.
Pilgrim's Pride’s expected earnings growth rate for the current year is 75.7%. The Zacks Consensus Estimate for current-year earnings has improved 19.3% over the past 60 days. PPC presently sports a Zacks Rank #1.
Mondelez International, Inc. is one of the leading global snacks’ companies. MDLZ makes snack food products. Mondelez International’s product categories include chocolates; biscuits (cookies, crackers and salted snacks); gum and candy, beverages and cheese & grocery products.
Mondelez International’s expected earnings growth rate for the current year is 10.3%. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 60 days. MDLZ has a dividend yield of 2.2%. Mondelez Internationalhas a Zacks Rank #2.
Molson Coors Beverage Company, the global manufacturer and seller of beer and other beverage products, has an impressive diverse portfolio of owned and partner brands. TAP’s brands include global priority brands such as Blue Moon, Miller Lite, CoorsBanquet, Coors Light, Miller Genuine Draft and Staropramen, as well as regional champion brands like Carling and Molson Canadian.
Molson Coors Beverage Company’s expected earnings growth rate for the current year is 4.2%. The Zacks Consensus Estimate for the current-year earnings has improved 3.1% over the past 60 days. TAP presently carries a Zacks Rank #2.
Grocery Outlet Holding Corp. is a high-growth, extreme-value retailer of quality, name-brand consumables and fresh products that are sold through a network of independently owned and operated stores. Notably, GO’s stores offer a fun, treasure hunt shopping experience in an easy-to-navigate, “small-box” format of size 15,000-20,000 square feet.
Grocery Outlet has an expected earnings growth rate of 10.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.5% over the last 60 days. GO currently has a Zacks Rank #2.
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5 Consumer Staples Stocks to Buy on Uncertainty Over Rate Cuts
Inflation increased in the first two months of the year and investors are uncertain as to when the Federal Reserve will start its rate cuts. This has raised concerns among market participants and made markets volatile.
The Federal Reserve said at the end of last year that it would soon end its rate hike regime and go for rate cuts in 2024. This came as inflation declined sharply in 2023 after the Federal Reserve’s aggressive monetary tightening policy to curb 40-year-high inflation saw it hiking interest rates by 525 basis points since March 2022. Inflation declined sharply from its peak of 9.1% in July 2023 to 2.9% by the end of last year.
The Fed’s assurance on rate cuts raised optimism among investors as they started hoping for the first rate cut in March. However, that didn’t happen as inflation rose in January and February.
The Consumer Price Index rose 3.2% in February, which faded hopes of a rate cut in March. The Federal Reserve also said that inflation is still quite above its 2% target and dismissed chances of a rate cut anytime soon.
Last month, the Federal Reserve once again said at the end of its FOMC meeting that it still plans three rate cuts of 25 basis points each by the end of this year. However, it didn’t give a timeline for the first rate cut, which has once again made investors jittery.
According to the CME FedWatch, investors are pricing in a 56% chance of a 25 bps rate cut, earliest by June. This uncertainty could keep markets volatile for a longer period.
Our Choices
Given this situation, it would be wise to invest in five defensive consumer staples, such as Colgate-Palmolive Company (CL - Free Report) , Pilgrim's Pride Corporation (PPC - Free Report) , Mondelez International, Inc. (MDLZ - Free Report) , Molson Coors Beverage Company (TAP - Free Report) and Grocery Outlet Holding Corp. (GO - Free Report) . These have a favorable Zacks Rank and are likely to strengthen one’s portfolio. 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.
Colgate-Palmolive Company’s business strategy closely defines efforts to increase its leadership in key product categories through innovation in core businesses, tracking adjacent categories’ growth and expansion into new markets and channels. Due to the shift of consumer preference to organic and natural ingredients, CL is expanding its Naturals range, including Naturals toothpaste.
Colgate-Palmolive Company has an expected earnings growth rate of 8.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 60 days. CL presently has a Zacks Rank #2.
Pilgrim's Pride Corporation is engaged in the processing, production, marketing and distribution of frozen, fresh as well as value-added chicken products. PPC offers its services in the United States, Mexico, France, the Netherlands, Puerto Rico and Mexico through a number of distributors, retailers and food service operators.
Pilgrim's Pride’s expected earnings growth rate for the current year is 75.7%. The Zacks Consensus Estimate for current-year earnings has improved 19.3% over the past 60 days. PPC presently sports a Zacks Rank #1.
Mondelez International, Inc. is one of the leading global snacks’ companies. MDLZ makes snack food products. Mondelez International’s product categories include chocolates; biscuits (cookies, crackers and salted snacks); gum and candy, beverages and cheese & grocery products.
Mondelez International’s expected earnings growth rate for the current year is 10.3%. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 60 days. MDLZ has a dividend yield of 2.2%. Mondelez Internationalhas a Zacks Rank #2.
Molson Coors Beverage Company, the global manufacturer and seller of beer and other beverage products, has an impressive diverse portfolio of owned and partner brands. TAP’s brands include global priority brands such as Blue Moon, Miller Lite, CoorsBanquet, Coors Light, Miller Genuine Draft and Staropramen, as well as regional champion brands like Carling and Molson Canadian.
Molson Coors Beverage Company’s expected earnings growth rate for the current year is 4.2%. The Zacks Consensus Estimate for the current-year earnings has improved 3.1% over the past 60 days. TAP presently carries a Zacks Rank #2.
Grocery Outlet Holding Corp. is a high-growth, extreme-value retailer of quality, name-brand consumables and fresh products that are sold through a network of independently owned and operated stores. Notably, GO’s stores offer a fun, treasure hunt shopping experience in an easy-to-navigate, “small-box” format of size 15,000-20,000 square feet.
Grocery Outlet has an expected earnings growth rate of 10.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.5% over the last 60 days. GO currently has a Zacks Rank #2.