Consumer staples stocks are solid insurance policies in frothy markets ripe for corrections. On the other hand, they usually underperform during bull runs, and this paradigm has rung true over the past six months as the sector’s -4.9% decline paled in comparison to the S&P 500’s 8.2% gain.
Investors should tread carefully as the low switching costs for everyday products mean that not all businesses are created equal. On that note, here are three consumer stocks we’re passing on.
B&G Foods (BGS)
Market Cap: $347.9 million
Started as a small grocery store in New York City, B&G Foods (NYSE: BGS) is an American packaged foods company with a diverse portfolio of more than 50 brands.
Why Should You Dump BGS?
- Products aren't resonating with the market as its revenue declined by 4.5% annually over the last three years
- Earnings per share decreased by more than its revenue over the last three years, showing each sale was less profitable
- High net-debt-to-EBITDA ratio of 7× could force the company to raise capital at unfavorable terms if market conditions deteriorate
At $4.36 per share, B&G Foods trades at 8.1x forward P/E. Dive into our free research report to see why there are better opportunities than BGS.
McCormick (MKC)
Market Cap: $16.36 billion
The classic red Heinz ketchup bottle’s competitor, McCormick (NYSE: MKC) sells food-flavoring products like condiments, spices, and seasoning mixes.
Why Are We Cautious About MKC?
- Annual revenue growth of 2.5% over the last three years was below our standards for the consumer staples sector
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Low returns on capital reflect management’s struggle to allocate funds effectively
McCormick’s stock price of $60.95 implies a valuation ratio of 19.7x forward P/E. Check out our free in-depth research report to learn more about why MKC doesn’t pass our bar.
SunOpta (STKL)
Market Cap: $559.2 million
Committed to clean-label foods, SunOpta (NASDAQ: STKL) is a sustainability-focused food and beverage company specializing in the sourcing, processing, and packaging of organic products.
Why Is STKL Risky?
- Sales tumbled by 1.6% annually over the last three years, showing consumer trends are working against its favor
- Revenue base of $792.4 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Gross margin of 15.4% is an output of its commoditized products
SunOpta is trading at $4.73 per share, or 27.9x forward P/E. To fully understand why you should be careful with STKL, check out our full research report (it’s free).
Stocks We Like More
Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
