Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see Barchart’s disclaimer. Another soft drink giant from the south, PepsiCo started in the 1890s in North Carolina. The company went broke during World War I as a result of sugar rationing, but it was later purchased—along with its famous cola recipe—by a holding company. WMT was founded in Bentonville, Ark., by Sam Walton, who was a pioneer in value retail. While the company is still headquartered in Arkansas, it now operates everywhere in the U.S. and in 24 countries.

1. More importantly, the consumer staples sector has outperformed the S&P 500 during the last three recessionary periods—or periods of negative growth in the gross domestic product (GDP).
2. Invesco has PBJ, its dynamic food & beverage ETF, along with a more general S&P SmallCap Consumer Staples ETF.
3. To the best of our knowledge, all information in this article is accurate as of time of posting.
4. You can invest in the consumer staples sector through individual stocks or ETFs.
5. Mondelez (MDLZ) earns a Zacks Rank #3 eight days from its next quarterly earnings release on January 30, 2024, and its Most Accurate Estimate comes in at $0.79 a share.
6. The consumer goods sector is one of the largest sectors of the US stock market, with a market capitalization of over $2 trillion.

We use a systematic bottom-up approach for stock selection and portfolio construction (see Exhibit 1), which we summarize as follows. Access exclusive data and research, personalize your experience, and sign up to receive email updates. Over the last 7 days, the Consumer Staples industry has risen 3.2%, driven by gains from Alimentation Couche-Tard of 4.5%. Kimberly Ellis is a personal finance writer at Finder, specializing in banking and financial literacy. After teaching in public and private schools, Kimberly zeroed in on personal financial education to help families and kids develop lifelong money skills. She hails from New York City, graduating summa cum laude from Queens College with a BA in elementary education and mathematics, as well as a New York State teaching certificate.

Consumer Staple Stocks and Inflation

If volumes rise, consumer staples companies will likely feel less pressure to ease prices, which would in turn help profit margins. Firms that boosted promotional and advertising spending in 2023 may have an added tailwind. Meanwhile, valuations in the sector have looked compelling versus the broader market and versus sector history. Any decline in interest https://forex-review.net/ rates could also boost the attractiveness of dividend-paying stocks. According to data from S&P 500 series of index funds, the consumer staples sector has returned an average of 6.56% per year over the past 10 years. This is lower than the overall return of the S&P total market index fund, which returned 9.54% annually on average for the last 10 years.

How to research the consumer staples sector

The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company’s report. The idea is relatively intuitive as a newer projection might be based on more complete information. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure. FLO pays a healthy dividend yield of 4.2% and has increased its shareholder payout annually for the last 22 years. For the quarter ending September 3, 2023, Costco reported a 9.4% increase in sales to $77.43 billion. Both metrics are relative to the year-ago quarter, which was one week shorter.

Why Now Is the Time for Value Investing

Consumer staples stocks can be a good option for investors seeking steady growth, solid dividends, and low volatility. Since the demand for consumer staples doesn’t slow even in a weak economy, the sector is noncyclical. An added perk is its higher dividend yield than the S&P 500 Index — even during a recession. Buoyed by the persistent demand of their products, consumer staples companies generate consistent revenues, even in recessionary periods. As a result, consumer staples stocks decline far less during bear markets than stocks in other sectors. With some products, such as food, alcohol, and tobacco, demand sometimes actually increases during economic downturns.

Consumer staples stocks are defensive

The Dow Jones Industrial Average DJIA ended 0.2% higher, at 33,804, while the S&P 500 gained 0.4% and the Nasdaq Composite COMP rose 0.7%, according to FactSet data. Because of their narrow focus, sector investments tend to be more volatile than investments that diversify across many sectors and companies. Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.

FLO has historically been a company that notched slow-and-steady gains, quarter after quarter. The company just absorbed $137 million in legal costs related to a California distributor-related class-action lawsuit. FLO is also in the process of exiting lower-margin lmfx review businesses, which has negatively impacted sales. Colgate, like Mondelez, owns leading brands and earns the bulk of its sales outside the U.S. The company’s position in emerging markets is attractive, but the big story for Colgate is its evolving business strategy.

There is a lower exposure to Energy in the mid- and small-cap indices, with the ninth heaviest sector weight in the S&P MidCap 400® and S&P SmallCap 600®, at 3.74% and 3.43%, respectively. Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. I believe that companies with attractive valuations and strong pricing power may offer the strongest returns potential for 2024.

They can also include companies that make tobacco products and fizzy beverages, like pop and sparkling water. The S&P 500® Energy includes all companies in the S&P 500 that are assigned to the Energy sector by GICS. Created in 1957, the S&P 500 was the first broad U.S. market-cap-weighted stock market index.

She’s also an aspiring polyglot, always in a book and forever on the hunt for the perfect classic red lipstick. Companies that make home maintenance products like detergents and dishwashing soap fall into this category. © 2024 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions.

The food industry is arguably Canada’s strongest among consumer staples. These stocks have traditionally included legacy grocery and discount stores. But they can also include startups specializing in vegan and plant-based foods. Many of Canada’s top consumer staples stocks are grocery and discount stores, like Alimentation Couche-Tard, Dollarama, and Loblaws. While Canada doesn’t have mega-cap consumer staples stocks on par with those found in the U.S. (like Walmart and Procter & Gamble), there are plenty of good opportunities on Canada’s home-turf exchanges. One unknown—for both 2024 and the longer term—may be the impact of the new weight-loss drugs.

In the third quarter of this year, Walmart reported year-over-year revenue growth of 4.3% in constant currency. Enter your email address below to receive the latest headlines and analysts’ recommendations for your stocks with our free daily email newsletter. Canada has foreign ownership limits that affect several industries, such as telecommunications, broadcasting, transportation, and real estate. Therefore, whether or not these limits are accounted for in the index is significant. If a brand is a referral partner, we’re paid when you click or tap through to, open an account with or provide your contact information to the provider.

They won’t deliver world-beating returns, but they won’t fail overnight either. Many pay dividends, too, which you can think of as a cash advance on growth. Consumer staples stocks tend to trade at a premium to the market, so it is important to find companies that are trading at a reasonable price. The other side to this is that a company could have a high P/E ratio and still be a viable investment. This is because investors sometimes pay more for a company with premium earnings, as can be seen from some of the most expensive stocks on the market today. Re-evaluate your portfolio periodically to ensure it accurately reflects your original goals and risk tolerance.

Diversification across multiple sectors and asset classes can help mitigate these risks and stabilize your portfolio. You could also consider adding bonds, real estate, or international investments to diversify your holdings further. Investing in consumer staples index funds is relatively straightforward compared to other types of investments.