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 14% over the past six months. This performance was worse than the S&P 500’s 6.2% loss.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Taking that into account, here is one resilient consumer stock we’ve added to our cart and two best left ignored.
Two Consumer Staples Stocks to Sell:
Mondelez (MDLZ)
Market Cap: $86.99 billion
Founded as Nabisco in 1903, Mondelez (NASDAQ: MDLZ) is a packaged snacks powerhouse best known for its Oreo, Cadbury, Toblerone, Ritz, and Trident brands.
Why Are We Hesitant About MDLZ?
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 7 percentage points
- Free cash flow margin dropped by 1.3 percentage points over the last year, implying the company became more capital intensive as competition picked up
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Mondelez’s stock price of $67.56 implies a valuation ratio of 22.3x forward P/E. If you’re considering MDLZ for your portfolio, see our FREE research report to learn more.
J. M. Smucker (SJM)
Market Cap: $11.95 billion
Best known for its fruit jams and spreads, J.M Smucker (NYSE: SJM) is a packaged foods company whose products span from peanut butter and coffee to pet food.
Why Are We Wary of SJM?
- Annual revenue growth of 3.7% over the last three years was below our standards for the consumer staples sector
- Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
- Underwhelming 4.1% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam
At $112.26 per share, J. M. Smucker trades at 11x forward P/E. Read our free research report to see why you should think twice about including SJM in your portfolio.
One Consumer Staples Stock to Watch:
Cal-Maine (CALM)
Market Cap: $4.69 billion
Known for brands such as Egg-Land’s Best and Land O’ Lakes, Cal-Maine (NASDAQ: CALM) produces, packages, and distributes eggs.
Why Do We Like CALM?
- Impressive 35.3% annual revenue growth over the last three years indicates it's winning market share
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 278% over the last three years outstripped its revenue performance
- CALM is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its rising cash conversion increases its margin of safety
Cal-Maine is trading at $96.91 per share, or 9.2x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks That Overcame Trump’s 2018 Tariffs
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. 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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
