Regarded as defensive investments, consumer staples stocks are generally safe bets in choppy markets. Unfortunately, the sector hasn’t provided much protection lately as it pulled back by 12.2% over the past six months. This drop was worse than the S&P 500’s 4.7% fall.

Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. On that note, here is one consumer stock boasting a durable advantage and two that may face trouble.

Two Consumer Staples Stocks to Sell:

WD-40 (WDFC)

Market Cap: $3.14 billion

Short for “Water Displacement perfected on the 40th try”, WD-40 (NASDAQ: WDFC) is a renowned American consumer goods company known for its iconic and versatile spray, WD-40 Multi-Use Product.

Why Does WDFC Worry Us?

1. Annual revenue growth of 5.7% over the last three years was below our standards for the consumer staples sector
2. Subscale operations are evident in its revenue base of $610.6 million, meaning it has fewer distribution channels than its larger rivals
3. 10 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position

WD-40 is trading at $224.50 per share, or 40.3x forward P/E. Dive into our free research report to see why there are better opportunities than WDFC.

Conagra (CAG)

Market Cap: $11.22 billion

Founded in 1919 as Nebraska Consolidated Mills in Omaha, Nebraska, Conagra Brands today (NYSE: CAG) boasts a diverse portfolio of packaged foods brands that includes everything from whipped cream to jarred pickles to frozen meals.

Why Do We Pass on CAG?

1. Falling unit sales over the past two years suggest it might have to lower prices to stimulate growth
2. Demand will likely fall over the next 12 months as Wall Street expects flat revenue
3. Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 7.9 percentage points

Conagra’s stock price of $23.55 implies a valuation ratio of 9.6x forward P/E. To fully understand why you should be careful with CAG, check out our full research report (it’s free).

One Consumer Staples Stock to Watch:

e.l.f. Beauty (ELF)

Market Cap: $3.82 billion

Short for "eyes, lips, face", e.l.f. Beauty (NYSE: ELF) is a developer of high-quality beauty products at accessible price points.

Why Are We Positive On ELF?

1. Remarkable 50.8% revenue growth over the last three years demonstrates its ability to capture significant market share
2. Differentiated product offerings are difficult to replicate at scale and result in a best-in-class gross margin of 70.8%
3. Earnings per share grew by 52.9% annually over the last three years and trumped its peers

At $67.69 per share, e.l.f. Beauty trades at 16.8x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

Stocks That Overcame Trump’s 2018 Tariffs

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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.