In the current market environment, rising interest rates and volatility have thrown investors a curveball in terms of where the market is headed in the short term. With growth seemingly losing its luster for the time being and several rotations taking place, it’s usually a good idea to focus on the sectors of the market that are showing strength during times like these. One good example is the consumer staples sector, which consists of companies that produce and sell items that consumers use daily.
Many of these stocks are rallying in a weak tape, which means that they are worth keeping an eye on going forward. What’s even more attractive about many of these stocks is that many of them are coming out of a downtrend and offer decent entry points at this time. Let’s take a look at 3 of the best consumer staples stocks to add now.
Sprouts Framers Market
Sometimes, adding shares of a company that has something unique about its business model can lead to big gains over the long term. That might be the case with Sprouts Farmers Market (NASDAQ:SFM), a specialty grocer that offers fresh, natural, and organic products at prices that are more affordable than your average health food store. What’s interesting about Sprouts is that its stores feature a unique open floor layout that is much smaller than traditional grocers. This allows customers to see across the entire store and shop quickly while helping the company benefit from more affordable leasing and maintenance costs.
Sprouts Farmers Market currently operates 362 stores in 23 states and has plans to open an additional 20 stores in 2021. It’s a company that should benefit from long-term consumer trends like the increasing demand for health and wellness products and value-oriented shopping. The stock is up over 19.5% in March thus far and could be one of the best consumer staples stocks to add now, especially given that the company is trading at an affordable valuation when compared to some of its competitors.
Procter & Gamble
There’s a lot to like about this leading consumer products company, Procter & Gamble (NYSE:PG). As a company that sells some of the most recognizable brand names in over 180 countries and territories, investors can count on consistent sales and reliable earnings. Brand names like Tide, Bounty, Charmin, Pampers, Cascade, Mr. Clean, Old Spice, Oral-B, and more offer product diversity and the potential for organic sales growth over the years, another big plus to consider. The company should also benefit from shifting consumer habits such as more people working from home and an increased emphasis on cleanliness and personal hygiene.
It’s been puzzling to see that Procter & Gamble has been selling off since its last earnings report, which saw the company’s Q2 sales jump 8% and EPS increase by 15% year-over-year to $1.64. However, it appears that the stock is coming out of the recent downtrend and is very close to reclaiming the 200-day moving average, which would be a solid entry point for long-term investors. This is also a great pick for dividend investors, as Procter & Gamble has raised dividends for 64 consecutive years and offers a 2.43% dividend yield at this time.
Mondelez)
You might not be familiar with Mondelez (NASDAQ:MDLZ), but the chances are good you’ve heard of some of the company’s most famous snack brands including Oreo, Nabisco, Toblerone, Trident gum, and Halls candy. Mondelez was formed after it was spun-off from Kraft Foods (NASDAQ:KHC) and is one of the leading global snack food companies. This company is a nice option in the consumer staples section to consider adding particularly since its opportunity to improve its sales in emerging markets like India, China, and Brazil could be a strong driver of earnings growth over the long run.
With the trend of increased snacking due to social distancing, the potential for a rebound in some of the markets that have been negatively impacted by the pandemic, and several cost reduction strategies, Mondelez is poised for a solid 2021. The company recently acquired Grenade, a leading UK performance nutrition company that further expands the company’s market position in Europe, where it generates the majority of its revenue. Mondelez stock currently offers investors a 2.14% dividend yield and the stock is up over 9% in March.