Consumer staples are considered safe havens in turbulent markets due to their inelastic demand profiles. Unfortunately, the sector hasn’t provided much protection lately as it pulled back by 10.4% over the past six months. This drop was disheartening since the S&P 500 held steady.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. With that said, here are two resilient consumer stocks we’ve added to our cart and one we’re steering clear of.
One Consumer Staples Stock to Sell:
Lancaster Colony (LANC)
Market Cap: $4.88 billion
Known for its frozen garlic bread and Parkerhouse rolls, Lancaster Colony (NASDAQ: LANC) sells bread, dressing, and dips to the retail and food service channels.
Why Does LANC Give Us Pause?
- Muted 6.7% annual revenue growth over the last three years shows its demand lagged behind its consumer staples peers
- Smaller revenue base of $1.9 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Gross margin of 23% is below its competitors, leaving less money to invest in areas like marketing and production facilities
Lancaster Colony is trading at $176.91 per share, or 25.7x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than LANC.
Two Consumer Staples Stocks to Watch:
Monster (MNST)
Market Cap: $55.29 billion
Founded in 2002 as a natural soda and juice company, Monster Beverage (NASDAQ: MNST) is a pioneer of the energy drink category, and its Monster Energy brand targets a young, active demographic.
Why Do We Love MNST?
- Healthy operating margin of 27% shows it’s a well-run company with efficient processes
- Strong free cash flow margin of 21.6% enables it to reinvest or return capital consistently, and its recently improved profitability means it has even more resources to invest or distribute
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
At $56.80 per share, Monster trades at 31.2x forward price-to-earnings. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Anheuser-Busch (BUD)
Market Cap: $114.6 billion
Born out of a complicated web of mergers and acquisitions, Anheuser-Busch InBev (NYSE: BUD) boasts a powerhouse beer portfolio of Budweiser, Stella Artois, Corona, and local favorites around the world.
Why Are We Positive On BUD?
- Enormous revenue base of $59.77 billion provides significant negotiating leverage in retail partnerships
- Unique products and pricing power lead to a top-tier gross margin of 54.6%
- Excellent operating margin of 24.9% highlights the efficiency of its business model, and it turbocharged its profits by achieving some fixed cost leverage
Anheuser-Busch’s stock price of $62.42 implies a valuation ratio of 8x forward EV-to-EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
The Trump trade may have passed, but rates are still dropping and inflation is still cooling. Opportunities are ripe for those ready to act - and we’re here to help you pick them.
Get started by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.
