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The Fed held rates at 3.75-4% as persistent inflation and high oil prices cloud the outlook.
ADM's earnings growth is projected at 62.1%, with a 2.66% dividend yield and a 0.64 beta.
DEO, LW and SJM offer dividend yields of 2.49%-3.52% and betas ranging from 0.28 to 0.57.
The Federal Reserve kept interest rates unchanged at the end of its two-day policy meeting on Wednesday. The move was highly anticipated despite concerns over high inflation and a slowing economy.
The ongoing war between the United States and Iran has resulted in a surge in oil prices over the past several months, leading to high inflation. Although the central bank held interest rates steady, Fed Chairman Kevin Warsh said that it remains focused on “price stability.”
High inflation continues to remain a challenge for the Federal Reserve, and future rate hikes can’t be ruled out.
Given this situation, it would be wise to buy defensive stocks from the consumer staples sector, namely Archer-Daniels-Midland Company (ADM - Free Report) , Diageo plc (DEO - Free Report) , Lamb Weston Holdings, Inc. (LW - Free Report) and The J. M. Smucker Company (SJM - Free Report) .
Interest Rates Unchanged, Crisis Continues
The Federal Reserve held interest rates steady in its current range of 3.75-4% at the end of its two-day FOMC meeting on Wednesday. The move was highly anticipated after the Federal Reserve hiked interest rates by a quarter percentage point in its September policy meeting.
Investors were earlier expecting the central bank to go for another interest rate hike by the end of this year but are now pricing in a 93% chance of the Fed keeping interest rates unchanged in its December meeting, according to the CME FedWatch tool.
However, another 25-0basis point rate hike by the end of this year cannot be ruled out as inflation remains stubbornly high and far above the central bank’s 2% target. The consumer price index (CPI) rose 0.6% month over month in September, after advancing 0.4% in August. Year over year, CPI rose 3.7% in September after advancing 3.4% in August.
Walsh said at the end of the October meeting that the Fed is closely monitoring “price stability” despite keeping interest rates unchanged. The Federal Reserve will now be assessing the third-quarter GDP report before zeroing in on the decision for another rate hike this year.
Also, oil prices remain high as there are no positive signs of negotiations between the United States and Iran. Markets have remained volatile for most of the second and third quarters, and uncertainty over the Fed’s next move could unsettle stocks.
4 Low-Beta Consumer Staple Stocks With Upside
Archer-Daniels-Midland Company
Archer-Daniels-Midland Company is one of the leading producers of food and beverage ingredients as well as goods made from various agricultural products. ADM processes oilseeds, corn, wheat, cocoa and other feedstuffs. It also engages in the manufacturing, sale, and distribution of products like natural flavor ingredients, flavor systems, natural colors, proteins, emulsifiers, soluble fiber, polyols, hydrocolloids, natural health and nutrition products, as well as other specialty food and feed ingredients.
Archer-Daniels-Midland Company has an expected earnings growth rate of 62.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.8% over the last 60 days. Archer-Daniels-Midland Company has a beta of 0.64 and a current dividend yield of 2.66%. ADM currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Diageo plc
Diageo plc operates in approximately 180 countries and is involved in producing, distilling, brewing, bottling, packaging, as well as distributing spirits, wine and beer. DEO offers its products under globally recognized flagship brands, such as Smirnoff, Johnnie Walker, Captain Morgan, Baileys, Buchanan’s, J&B, Tanqueray and Guinness.
Diageo has an expected earnings growth rate of 2.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4% over the last 60 days. Currently, DEO has a Zacks Rank #2. Diageo has a beta of 0.57 and a current dividend yield of 2.49%.
Lamb Weston Holdings
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 7.6%. The Zacks Consensus Estimate for the current-year earnings has improved 5.9% over the past 60 days. LW currently has a Zacks Rank #2. Lamb Weston has a beta of 0.49 and a current dividend yield of 2.83%.
The J. M. Smucker Company
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 Company mainly 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 17.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% 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 3.52%.
View the Zacks #1 Rank List
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Fed Holds Interest Rates Steady Amid Inflationary Concerns: 4 Safe Bets
Key Takeaways
The Federal Reserve kept interest rates unchanged at the end of its two-day policy meeting on Wednesday. The move was highly anticipated despite concerns over high inflation and a slowing economy.
The ongoing war between the United States and Iran has resulted in a surge in oil prices over the past several months, leading to high inflation. Although the central bank held interest rates steady, Fed Chairman Kevin Warsh said that it remains focused on “price stability.”
High inflation continues to remain a challenge for the Federal Reserve, and future rate hikes can’t be ruled out.
Given this situation, it would be wise to buy defensive stocks from the consumer staples sector, namely Archer-Daniels-Midland Company (ADM - Free Report) , Diageo plc (DEO - Free Report) , Lamb Weston Holdings, Inc. (LW - Free Report) and The J. M. Smucker Company (SJM - Free Report) .
Interest Rates Unchanged, Crisis Continues
The Federal Reserve held interest rates steady in its current range of 3.75-4% at the end of its two-day FOMC meeting on Wednesday. The move was highly anticipated after the Federal Reserve hiked interest rates by a quarter percentage point in its September policy meeting.
Investors were earlier expecting the central bank to go for another interest rate hike by the end of this year but are now pricing in a 93% chance of the Fed keeping interest rates unchanged in its December meeting, according to the CME FedWatch tool.
However, another 25-0basis point rate hike by the end of this year cannot be ruled out as inflation remains stubbornly high and far above the central bank’s 2% target. The consumer price index (CPI) rose 0.6% month over month in September, after advancing 0.4% in August. Year over year, CPI rose 3.7% in September after advancing 3.4% in August.
Walsh said at the end of the October meeting that the Fed is closely monitoring “price stability” despite keeping interest rates unchanged. The Federal Reserve will now be assessing the third-quarter GDP report before zeroing in on the decision for another rate hike this year.
Also, oil prices remain high as there are no positive signs of negotiations between the United States and Iran. Markets have remained volatile for most of the second and third quarters, and uncertainty over the Fed’s next move could unsettle stocks.
4 Low-Beta Consumer Staple Stocks With Upside
Archer-Daniels-Midland Company
Archer-Daniels-Midland Company is one of the leading producers of food and beverage ingredients as well as goods made from various agricultural products. ADM processes oilseeds, corn, wheat, cocoa and other feedstuffs. It also engages in the manufacturing, sale, and distribution of products like natural flavor ingredients, flavor systems, natural colors, proteins, emulsifiers, soluble fiber, polyols, hydrocolloids, natural health and nutrition products, as well as other specialty food and feed ingredients.
Archer-Daniels-Midland Company has an expected earnings growth rate of 62.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.8% over the last 60 days. Archer-Daniels-Midland Company has a beta of 0.64 and a current dividend yield of 2.66%. ADM currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Diageo plc
Diageo plc operates in approximately 180 countries and is involved in producing, distilling, brewing, bottling, packaging, as well as distributing spirits, wine and beer. DEO offers its products under globally recognized flagship brands, such as Smirnoff, Johnnie Walker, Captain Morgan, Baileys, Buchanan’s, J&B, Tanqueray and Guinness.
Diageo has an expected earnings growth rate of 2.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4% over the last 60 days. Currently, DEO has a Zacks Rank #2. Diageo has a beta of 0.57 and a current dividend yield of 2.49%.
Lamb Weston Holdings
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 7.6%. The Zacks Consensus Estimate for the current-year earnings has improved 5.9% over the past 60 days. LW currently has a Zacks Rank #2. Lamb Weston has a beta of 0.49 and a current dividend yield of 2.83%.
The J. M. Smucker Company
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 Company mainly 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 17.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% 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 3.52%.