Consumer staples stocks are solid insurance policies in frothy markets ripe for corrections. But recently, the industry has failed to do its job as it shed 5.7% over the past six months. This drawdown was worse than the S&P 500’s 1% decline.

Given the low switching costs of basic goods like paper towels, many companies will continue generating poor results while only a handful will shine. Taking that into account, here are three consumer stocks best left ignored.

Boston Beer (SAM)

Market Cap: $2.39 billion

Known for its flavorful beverages challenging the status quo, Boston Beer (NYSE: SAM) is a pioneer in craft brewing and a symbol of American innovation in the alcoholic beverage industry.

Why Is SAM Not Exciting?

1. Products have few die-hard fans as sales have declined by 2% annually over the last three years
2. Subscale operations are evident in its revenue base of $1.96 billion, meaning it has fewer distribution channels than its larger rivals
3. Sales are projected to be flat over the next 12 months and imply weak demand

Boston Beer is trading at $233.83 per share, or 23.1x forward P/E. To fully understand why you should be careful with SAM, check out our full research report (it’s free).

Flowers Foods (FLO)

Market Cap: $1.77 billion

With Wonder Bread as its premier brand, Flowers Foods (NYSE: FLO) is a packaged foods company that focuses on bakery products such as breads, buns, and cakes.

Why Do We Avoid FLO?

1. Shrinking unit sales over the past two years imply it may need to invest in product improvements to get back on track
2. Estimated sales decline of 1.3% for the next 12 months implies a challenging demand environment
3. Incremental sales over the last three years were much less profitable as its earnings per share fell by 21% annually while its revenue grew

Flowers Foods’s stock price of $8.35 implies a valuation ratio of 9.9x forward P/E. If you’re considering FLO for your portfolio, see our FREE research report to learn more.

Estée Lauder (EL)

Market Cap: $25.23 billion

Named after its founder, who was an entrepreneurial woman from New York with a passion for skincare, Estée Lauder (NYSE: EL) is a one-stop beauty shop with products in skincare, fragrance, makeup, sun protection, and men’s grooming.

Why Are We Cautious About EL?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Subpar operating margin of 0.3% constrains its ability to invest in process improvements or effectively respond to new competitive threats
3. Earnings per share decreased by more than its revenue over the last three years, partly because it diluted shareholders

At $70.03 per share, Estée Lauder trades at 27.6x forward P/E. Read our free research report to see why you should think twice about including EL in your portfolio.

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