Four Stocks That Can Hold Up Well in a Big Market Sell-Off

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Every indicator tracked on Wall Street says the market is expensive, very expensive. The only legitimate reason to keep buying stock at these levels is a good one: It's a better buy than the bond market, especially the Treasury market. So what are investors to do, needing to put capital to work but concerned they are going in right before a sell-off?

A new report from Stifel makes the case that there are four large-cap, very solid consumer staples stocks that are not only still priced good, but may have solid upside for investors. While the firm is neutral on the food sector, the analysts are incrementally more positive on the U.S. and international tobacco sector.

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Here are the four large-cap consumer staples stocks on which Stifel now has a rating of Buy.

Altria Group Inc. (MO) is a top tobacco name to buy, and the company's Marlboro brand is one of the most recognizable in the world. The Stifel analysts believe the stock has solid downside support owing to the generous dividend yield, which remains at a significant premium in relation to the 10-year Treasury rate.

The Stifel report points out that cash flow generation and the return of cash to Altria shareholders remain key facets of the company's total shareholder return, and the analysts expect support of the strong dividend, which they believe will continue to climb, and strong share repurchase activity ($800 million estimated in 2014). The actual current dividend yield to shareholders is 4.6%. The Stifel price target for the stock is $43. The Thomson/First Call estimate is $40. Altria closed Tuesday at $41.68 a share.

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General Mills Inc. (GIS) should continue to have strong sales as long as there is a demand for breakfast, which seems like a good bet. The company's products include ready-to-eat cereals, refrigerated yogurt, ready-to-serve soups, dry dinners, shelf stable and frozen vegetables, ice creams and frozen desserts, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza and pizza snacks, grains, fruit and savory snacks, and various organic products, including granola bars, cereals and soups. In other words General Mill covers a full gamut of consumer food products.

Shareholders are paid a very solid 3% dividend. The Stifel price target is posted at $55, which they acknowledge is close to the current trading level. The consensus target is at $52.57. General Mills closed Tuesday at $54.29.

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Kraft Foods Group Inc. (KRFT) is another iconic food company with a host of popular brand names that consumers have loved for years. The Stifel team says flat-out that they believe Kraft could warrant a premium multiple, given the potential for strong earnings growth over the next several years. They cite a strong cost saving initiative as a way the company can spur strong earnings growth, and its marketing investment to accelerate its revenue growth. Shareholders are paid a 3.6% dividend. The Stifel price target is $60, while the consensus is at $58.53. The stock closed Tuesday at $59.35.

Philip Morris International Inc. (PM) is the other tobacco name the Stifel team is positive on. The analysts think that the company's recent sales, volume and earnings growth performance could be running ahead of this guidance range. If that is indeed the case, and they beat current expectations, the stock could jump. The European Union region remains an important market for Philip Morris, as it contributes almost one-third of the company's consolidated operating income. Investors are paid an outstanding 4.3% dividend. The Stifel price target is $93, and the consensus target is $87.63. Philip Morris closed Tuesday at $88.74.

These are not the kind of stocks that get the momentum investor excited. They are the kind of stocks that long-term growth and income investors cherish: strong, dependable earnings and products that do not go out of style. No moon shots here, and most likely no stock collapses either.

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