If that recession doesn’t materialize, you could miss out on larger gains available in other sectors. The profit margins on consumer staples products are razor thin, providing stocks in the sector with very modest opportunities for growth. In periods when the economy is doing well, consumer staples stocks may underperform other more dynamic sectors. This makes consumer staple stocks good to own, especially in the event of a recession or economic downturn.
Individual stock picking can be a very risky way of investing, and that means you should pursue this strategy with your eyes wide open. Investors can buy consumer discretionary stocks using a standard taxable brokerage account or a tax-advantaged individual retirement account (IRA). If you’re new to investing, or you’d like to change up your current investing accounts, be sure to check out Forbes Advisor’s list of the best online brokerages and the best investment apps.
Reuters provides business, financial, national and international news to professionals via desktop terminals, the world’s media organizations, industry events and directly to consumers. In fact, the consumer staples was the single best performing during calendar year 2008. The remaining stocks in this spreadsheet are those with https://bigbostrade.com/ dividend yields above 3% and market capitalizations above $10 billion. The next screen that we’ll implement is for ‘blue chip stocks’ – those with dividend yields above 3% and market capitalizations above $10 billion. The remaining stocks in the spreadsheet are consumer staples with price-to-earnings ratio less than 25.
Coca-Cola Stock Has Been Struggling. The Tables Have Turned for Consumer Staples.
The histogram shows where the open and last price fall within that range. Kraft Heinz formed with a merger in 2015, so the 15-year annualized total returns are not available. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. When people have a little extra cash, they indulge in offerings from these companies.
Next, research the market segments that are positioned to deliver on your priority. Personal care product makers offer good downside protection, while tobacco companies pay nice dividends. Companies with a strong track record for product innovation and expansion can deliver long-term value creation. Estee Lauder is the second-biggest pure-play cosmetics company in the world behind L’Oreal (LRLCY -2.07%), and it has an impressive array of prestige beauty brands, including Clinique, Aveda, La Mer, and MAC. The company’s recent growth has been driven in large part by its success in the Chinese market, where its skin care products have performed particularly well. It’s not just the rock solid sales and earnings that show consistency year in and year out thanks to the recession-proof nature of junk food sales.
It lowered its guidance for earnings-per-share from $4.45-$4.65 to $4.00-$4.05. Walgreens Boots Alliance is the largest retail pharmacy in the United States and Europe. The company has a presence in more than nine countries through its flagship Walgreens business and other business ventures. Traffic was up 0.9% year-over-year, down from 3.9% in the same period a year ago. Comparable sales were up 0.7%, offset by a decline in comparable digital sales, so the company missed estimates of growth of 1.1%.
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What’s most interesting, however, is that activist investor Nelson Peltz – who was instrumental in turning Procter & Gamble’s business around – has been added to Unilever’s board of directors. Additionally, cosmetics companies were hit harder by the COVID-19 pandemic than most consumer staples businesses because social distancing led to a decline in the demand for makeup and fragrances. The company also owns Frito-Lay and Quaker, as well as popular drink brands such as Mountain Dew and Gatorade. Its Frito-Lay snack business generates almost as much revenue in North America as its beverages, and that business has been a source of growth while soda sales slow in the U.S. and around the world.
- For investors who prefer to take a contrarian approach, Unilever is working on a business turnaround.
- For the major indices on the site, this widget shows the percentage of stocks contained in the index that are above their 20-Day, 50-Day, 100-Day, 150-Day, and 200-Day Moving Averages.
Price increases also need to be balanced against the risk of consumers trading down to cheaper alternatives. Because consumer staples companies operate in stable sectors and sell products that are always in demand, the biggest ones have been around for a century or more. Their longevity is a reflection of their brand value, a history of acquiring smaller brands, and their ability to endure a wide range of challenges and economic cycles. Consumer ondas de elliot staples stocks function in a non-cyclical manner, meaning they offer investors safety during recessionary climates. Since these companies sell goods such as food and cleaning products that consumers rely on regardless of the state of the economy, they tend to generate solid profits even in weak economies. The Vanguard Consumer Staples Index Fund (VCSAX) is one of the largest and most popular index funds tracking the consumer staples sector.
A consumer staples exchange-traded fund (ETF) invests in companies that produce essential consumer products such as food, beverages, personal care items and household products. Consumer staples ETFs are a type of sector ETF, which means they track a particular sector of the economy. In strong economies, consumer staples stocks won’t usually appreciate as quickly as other stocks. Say you go heavy into consumer staple stocks because of an expected recession.
What are some examples of consumer staples products?
We also offer sector mutual funds and sector ETFs from other leading asset managers. Consumer staples stocks are an appealing investment category for a number of reasons. To filter by dividend yield, click the filter icon at the top of the dividend yield icon, as shown above. Monster Beverage through its subsidiaries produces and sells energy drinks under brand names Monster Energy, Burn, NOS, Full Throttle, Reign and Predator.
One of the benefits of buying dividend stocks in various sectors of the stock market is that dividend payments can help offset some of the decline in stock value during an economic downturn. Another benefit is that investors can benefit from the compounding effect of dividends if they invest long-term. When dividends are paid, investors can invest that money in consumer staples dividend stocks to buy more shares and earn a higher total return.
While it is primarily known for its tobacco products, it is significantly involved in the beer business due to its 10% stake in global beer giant Anheuser-Busch InBev. In a reversal of the trend, consumer staples sector has shed 3.4% in 2023, the most among the major S&P sectors, while the S&P 500 (.SPX) has climbed 1.5% on easing bets of a severe economic downturn. You might still have a few questions about this vital stock market sector, beyond “What is consumer staples? We’ve put together this FAQ section to help answer any lingering questions. Whether you’re a seasoned investor or just starting, this section will provide some clarity and guidance on this critical aspect of the stock market.
These companies have a long history of stable earnings and dividends and tend to perform well during economic downturns. Consumer staples are products people need to buy regardless of economic conditions, making the sector relatively stable. Additionally, companies producing these products often have established brand names and loyal customer bases, protecting against the competition. On the other hand, the growth potential of consumer staple companies may slow down and be vulnerable to changes in consumer preferences or regulatory changes. Click here to instantly download your free Excel spreadsheet of all 71 consumer staples stocks, along with important investing metrics like price-to-earnings ratios and dividend yields.
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Nestle is a Swiss multinational known for—you guessed it—chocolate. The company started as a condensed milk company, and milk chocolate was one of its first products. Today, the firm has expanded to produce a gigantic range of different foods and beverages. Based on the most recent data, AGRO has returned 41.7% so far this year. Meanwhile, the Consumer Staples sector has returned an average of -4.1% on a year-to-date basis.
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The company operates 800 stores worldwide, though stores exist in fewer than 20 countries and almost 70% of its stores are located in the U.S. PEP has owned a number of other brands, many of which it sold off in the 1990s, such as restaurant chains Pizza Hut, Taco Bell and KFC, plus the U.S. rights to Russian distiller Stolichnaya. Today, it still owns several snack and beverage brands, including Gatorade, Lay’s, Doritos, Cheetos, Mountain Dew and Quaker Foods. © 2023 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed.
Regardless of the reason, the performance of Tootsie Roll lately makes it stand out among consumer staples stocks. What’s more, premium brands like Kraft have more wiggle room when it comes to raising prices to offset inflationary pressures. Consider that across the first nine months of fiscal 2022, Kraft Heinz increased its product prices by an average of 12.3%, even as overall sales remained flat.
Moreover, the company sells its product directly to consumers through its own sales channel and has a sizable market overseas. Eggs, milk, soda, bath soap, laundry detergent, socks, underwear, pet food, diapers, toilet paper, cigarettes, ibuprofen and cough medicine are all consumer staples products. Mondelez International produces revenues of $31.5 billion annually. The company’s dividend yields just under 2% and the annualized total return over the last 15 years is 8.4%.
Consumer goods are goods that people cannot or do not want to cut back on, regardless of the state of the economy. This is because companies have to pay more for their inputs but may not be able to pass these higher costs on to consumers. In addition, inflation can affect consumer goods stocks in yet another way. When inflation is high, consumers may cut back on spending, which leads to lower sales for businesses in the sector. Thus, firms in this industry can benefit from higher product prices because consumers still have to buy these goods. In addition, firms can compensate for higher input costs by being more efficient or by passing on some of the costs to consumers.
That’s because trends in the beauty business, which are subject to broader fashion tastes, tend to change more quickly and attract smaller brands. Procter & Gamble is best known for its marquee brands such as Tide, Gillette, and Crest. A large number of its brands hold the No. 1 or No. 2 market share position in their categories, including paper products, laundry detergent, diapers, and beauty products.