3 Consumer Staple Stocks To Weather Market Storm

Despite rising consumer confidence, a lot of factors are plaguing the U.S. economy of late. We note that the market is currently caught between weaker-than-expected March employment data, President Donald Trump’s airstrike against Syria and new policies from Federal Reserve (‘Fed’) that have already begun to hurt investors’ sentiment.

Let’s Delve Deeper

Last week commenced with disappointing auto sales data and a decline in U.S. manufacturing purchasing manager’s index from 54.2 in the previous month to 53.3 in March, signaling concern over the economic outlook. The news pulled down major indices, including The Dow Jones Industrial Average, The S&P 500 index and Nasdaq. The markets faced another blow after Fed’s March FOMC meeting released on Apr 5. The notes of the meeting showed that policy makers plan to begin unwinding the central bank’s balance sheet obligations before the end of the year, instead of waiting until sometime next year, thus driving down shares.

Though the markets rebounded on Apr 6 as Trump met with Chinese President Xi Jinping on matters of jobs and economic ramifications, U.S. stocks again closed lower on Apr 7 after a choppy session as investors remained concerned over weaker-than-expected March jobs data and Trump’s airstrike against Syria. The Labor Department report showed that the U.S. created just 98,000 new jobs in March, as against a prediction of 185,000 increase in non-farm jobs, due to slowdown in hiring.

Further, the United States’ decision to fire missiles at a Syrian government airbase just two days after President Bashar al-Assad launched a poison gas attack that killed hundreds of Syrian civilians, also pulled down shares.

Major market indices including The Dow Jones Industrial Average, The S&P 500 and NASDAQ were down 0.13%, 0.39% and 0.74% in the past one week, thus unnerving investors ahead of the first quarter results.

Consumer Staple Stocks – a Safe Haven

Amid this scenario, you need to position yourself in stocks with the strongest chances of long-term success. The consumer staples sector is considered as the most attractive bet in times of economic turbulence. Stocks of consumer staple companies are poised to grow, as evident from the renewed consumer spending strength. Per the Zacks Earnings Trend, earnings of the consumer staple companies enlisted on the S&P 500 are expected to increase 3.1% on 4.0% revenues for first-quarter 2017 as of Apr 7.

How to Pick the Best Stocks?

Fetching higher returns amid such an investment climate is a herculean task. Just picking stocks on the basis of their price performance is not a good investment decision. One should check out the other factors before zeroing in on the profitable stocks.

With the help of our style score system, we have identified three consumer staples stocks that have excellent prospects and are good bets in this uncertain market.

Our Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of value traps and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.

Thus, we have picked up stocks that have an attractive value score and a favorable Zacks Rank. Also, these have produced yields above than the market indices on a year-to-date basis, despite an overall gloomy picture. On a year-to-date basis, stocks of major market indices including The Dow Jones Industrial Average, The S&P 500 and NASDAQ declined 4.8%, 5.6% and 9.6%.

Stocks to Pick

You can bet on Tupperware Brands Corporation (NYSE:TUP) , which operates as a direct-to-consumer marketer of various products across a range of brands and categories worldwide. The stock carries a Zacks Rank #2. The Orlando, FL-based company delivered an average positive earnings surprise of 6.2% over the trailing four quarters, has a long-term earnings growth rate of 12.0% and a Value score of ‘A.’

If we look into year-to-date’s performance, Tupperware’s shares have outperformed the Zacks categorized Consumer Products-Miscellaneous Staples industry. The stock rallied 19.5% in comparison to the above mentioned industry’s growth of 10.5% and has also outgrown the market indices mentioned above.

Texas-based Darling Ingredients, Inc. (NYSE:DAR) , which is a provider of rendering, cooking oil and bakery waste recycling and recovery solutions, is also an attractive stock. It carries a Zacks Rank #2 along with a Value Score ‘A.’

Coming to the share price movement, the stock rallied 11.3% year-to-date, as against the Zacks-categorized Food-Miscellaneous/Diversified industry’s decline of 1.4%. The stock’s yield also outperformed the market indices on a year-to-date basis.

Investors can count on London-based Unilever (LON:ULVR), Plc (NYSE:UL) , which operates in the fast-moving consumer goods industry worldwide. It carries a Zacks Rank #2 along with a Value Score ‘B.’ It has a long-term earnings growth rate of 9.92%.

Coming to the share price movement, the stock rallied 23.2% on a year-to-date basis, outperforming the Zacks categorized Soap & Cleaning Preparations industry’s gain of 11.3% and the market indices.

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