Consumer staples stocks are solid insurance policies in frothy markets ripe for corrections. Surprisingly, the sector hasn’t played its shielding role over the past six months as it tumbled 11.6%. This drawdown was especially 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. On that note, here is one consumer stock poised to generate sustainable market-beating returns and two we’re swiping left on.

Two Consumer Staples Stocks to Sell:

MGP Ingredients (MGPI)

Market Cap: $613.6 million

Headquartered in Atchison, Kansas, MGP Ingredients (NASDAQ: MGPI) is a leading supplier of high-quality ingredients to the food and beverage industry

Why Do We Avoid MGPI?

1. Lackluster 3.9% annual revenue growth over the last three years indicates the company is losing ground to competitors
2. Projected sales decline of 24.3% for the next 12 months points to a tough demand environment ahead
3. Efficiency has decreased over the last year as its operating margin fell by 7.2 percentage points

MGP Ingredients’s stock price of $28.85 implies a valuation ratio of 8.4x forward price-to-earnings. Read our free research report to see why you should think twice about including MGPI in your portfolio.

Zevia (ZVIA)

Market Cap: $132.6 million

With a primary focus on soda but also a presence in energy drinks and teas, Zevia (NYSE: ZVIA) is a better-for-you beverage company.

Why Does ZVIA Fall Short?

1. Annual revenue growth of 3.9% over the last three years was below our standards for the consumer staples sector
2. Revenue base of $155 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. Persistent operating losses suggest the business manages its expenses poorly

Zevia is trading at $2.23 per share, or 0.8x forward price-to-sales. If you’re considering ZVIA for your portfolio, see our FREE research report to learn more.

One Consumer Staples Stock to Watch:

Brown-Forman (BF.B)

Market Cap: $15.84 billion

Best known for its Jack Daniel’s whiskey, Brown-Forman (NYSE: BF.B) is an alcoholic beverage company with a broad portfolio of brands in wines and spirits.

Why Do We Like BF.B?

1. Differentiated product offerings are difficult to replicate at scale and lead to a best-in-class gross margin of 60.2%
2. Excellent operating margin of 28.6% highlights the efficiency of its business model, and its rise over the last year was fueled by some leverage on its fixed costs
3. ROIC punches in at 21.4%, illustrating management’s expertise in identifying profitable investments

At $33.65 per share, Brown-Forman trades at 16.3x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our full research report, it’s free.

Stocks We Like Even More

With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.

Put yourself in the driver’s seat by checking out our Top 9 Market-Beating Stocks. 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.