Consumer staples stocks held up well during the COVID-19 pandemic, and for good reason. Even though some of the best consumer staples stocks haven’t been leading the charge when the stock market kept hitting new highs, they have increasingly occupied the minds of investors as of late. With many of the stay-at-home trade names seemingly running out of gas, would repositioning your cash in consumer staples be a good strategy now?
While the clear reason for an investment in consumer staples is the stability that comes with it, there are also a couple of other reasons to consider. For one, If you’re worried about inflation and interest rate uncertainty, consumer staples stocks can provide a great long-term hedge. That’s because these companies often have the ability to pass along the increasing costs to their customers.
More importantly, they’re the kind of goods you will buy regardless of the state of the economy. Not to mention the amount you spend on them is also relatively constant. Sure, they might not be the shiniest investment in the stock market today, but these stocks could calm your nerves when the stock market wobbles. If you’re looking for undervalued stocks to buy, do you have these top consumer staples stocks on your watchlist right now?Top Consumer Staples Stocks To Watch Right Now
- PepsiCo Inc. (NASDAQ: PEP)
- Walmart Inc. (NYSE: WMT)
- Dollar General Corp. (NYSE: DG)
- Target Corp. (NYSE: TGT)
- Colgate-Palmolive Co. (NYSE: CL)
PepsiCo just offered investors another reason to invest in PEP stock. Apart from being a consumer staples stock, it might soon strengthen its position as one of the top dividend stocks to buy. That’s because the consumer giant just announced a quarterly dividend of $1.075 per share, representing a 5% increase year-over-year. The news of the dividend hike came after the company reported a blowout quarter as restaurants reopened.
From its fiscal second-quarter report this week, PepsiCo earned $2.37 billion, $1.70 per share, on revenue of $19.2 billion for the three months ending in June. The company also raised its 2021 outlook on sales and profitability, making an even stronger case for PEP stock. In addition to soda, following the recent partnership with Beyond Meat (NASDAQ: BYND) and the acquisitions of Frito-Lay and Quaker Oats, Pepsi is now the world’s third-largest food company. Considering its consistent dividend yield and strong revenue growth, would you say PEP stock has more growth potential than it seems?Source: TD Ameritrade TOS
Walmart is no doubt a household name and is the largest retailer worldwide. Through its massive network of hypermarkets spanning 24 countries, the company continues to dominate the retail space. Recently, Walmart-backed Indian e-commerce store Flipkart raised $3.6 billion in fresh funds. The retail giant is expected to hold around 75% stake in Flipkart after the funding exercise.
Walmart reported earnings per share of $1.69 on revenue of $138.3 billion in its first fiscal quarter, beating Wall Street’s estimates. While its brick-and-mortar business remains rock-solid, the company’s e-commerce business is also growing fast. Management expressed confidence that the growth of marketplace, fulfillment, and advertising can lift profit margins for the company as a whole. Considering the strong fundamentals, do you have WMT stock in your list of top consumer staples stocks to buy as we kick start the new earnings season?Source: TD Ameritrade TOS Dollar General
Dollar General is a massive retail chain operator that offers daily necessities in stores across the U.S. at everyday low prices. Although it is more commonly known for selling everyday consumer goods, the company’s recent announcement to establish itself as a health destination is a great initiative. And investors should be encouraged by this latest development. Dollar General operates over 17,266 stores in the U.S. Notably, this far exceeds the combined total U.S. stores of Target and Walmart.
From its first-quarter result, net sales for the quarter were $8.4 billion. Dollar General also posted diluted earnings per share of $2.82, an increase of 10.2% year-over-year. It also posted a net income of $677.7 million for the quarter. The company is off to a strong start for its fiscal 2021 and has exceeded expectations. It also sees strong underlying performance across its business. Besides, Dollar General reported that it benefitted from the most recent round of government stimulus payment. Also, it has raised its financial outlook for fiscal 2021. All things considered, is DG stock a top retail stock to buy?Source: TD Ameritrade TOS Target
Target is one of the largest retailers in the U.S. and is a component of the S&P 500 Index. The company boasts over 1,900 stores in the U.S. and has over 40 distribution centers. Impressively, the company claims that 75% of the U.S. population lives within 10 miles of a Target store. Target has been one of the few retail companies that weathered through the pandemic exceptionally well.
From its first-quarter fiscal, the numbers reported were enough to impress any investor. The company’s comparable sales came in 22.9% higher year-over-year. Digital comparable sales grew by a commendable 50%, on top of a 141% growth a year ago. First-quarter GAAP earnings per share were $4.17, skyrocketing by 643.2% compared to a year ago. These figures are certainly impressive, but Target is showing no signs of slowing down. In fact, it plans on investing $4 billion annually to expand offerings through its delivery and pick-up services, making it easier to reach its customers. Given all of this, will you consider adding TGT stock to your watchlist?Source: TD Ameritrade TOS Colgate-Palmolive
Colgate-Palmolive is possibly one of the best consumer staples stocks in the stock market. Clearly, with coronavirus cases still high in many countries, there’s never been a more important time for self-care. That said, it is safe to say that no one is going to stop brushing their teeth because of a pandemic. Apart from that, investors love CL stock because it has good regional diversification. Its key business segments include home care, personal care, oral care, and pet nutrition, and some of these are seeing stronger demands during the pandemic.
It is also reassuring that the company reported first-quarter revenue and profit that topped expectations. Sales rose 6.0% to $4.34 billion, exceeding analysts’ consensus of $4.27 billion. Besides, its earnings per share of $0.80 narrowly beat the consensus of $0.79. Many investors are turning to CL stock because of its strong track record in paying a dividend. If you’re an income investor, CL stock would stand out as one of the best dividend stocks to buy. The company made its first payout in 1895 and has begun increasing its dividend every year since 1963. Considering all these, does CL stock have a place in your portfolio?Source: TD Ameritrade TOS