Even amid the pandemic-led jeopardized economy, the Consumer Staples space has been a relatively safe spot. As the sector houses companies offering essentials like packaged foods and beverages, cleaning products, and household and personal care products, among others, it has been in a good position as demand for such products has been high amid the pandemic-induced stockpiling and increased at-home consumption.
We note that the performance of several consumer staple players (especially packaged food and cleaning material companies) has been benefiting from burgeoning demand owing to the coronavirus-led stock hoarding and elevated stay-at-home trends. Further, the gradual reopening of stores, salons and other businesses along with the lifting of certain curbs since May has brought back operations of a number of companies on track, which were otherwise hurt for a while.
We expect these upsides to be reflected in the performance of many players from the Consumer Staples space this earnings season. Apart from this, companies from this space have been benefiting from contributions from buyouts, product innovation and other brand-building efforts. Further, their stringent saving and restructuring efforts have been helping them tackle cost inflation as well as expenditures related to managing operations amid the COVID-19 crisis.
All said, we have brought focus on some consumer staple stocks, which carry a favorable Zacks Rank and have the potential to beat earnings estimates this reporting cycle. Also, most of these companies have delivered returns of more than 8% in the past three months.
Here’s the Right Way to Pick Them
We used the Zacks Stock Screener to identify five well-ranked consumer staple stocks, which are poised to beat the Zacks Consensus Estimate this earnings season. Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), the chances of a positive earnings surprise are as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
5 Potential Winners
Nu Skin Enterprises, Inc. NUS is a provider of premium cosmetics, beauty and personal care products. The stock has a Zacks Rank #1 and an Earnings ESP of +13.74%. The company has delivered an earnings surprise of 13.5%, on average, in the trailing three quarters. Carrying a VGM Score of B, shares of Nu Skin have rallied considerably over the past three months. The Zacks Consensus Estimate for earnings in the to-be-reported quarter is pegged at 59 cents per share. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Clorox Company CLX has rallied 14.8% in the past three months. The stock, which has a Zacks Rank #2 and an Earnings ESP of +0.67%, is worth betting on. The Zacks Consensus Estimate for earnings in the to-be-reported quarter is pegged at $1.99 per share, suggesting growth of 5.9% from the prior-year quarter’s reported figure. This cleaning and household products company has a trailing four-quarter earnings surprise of 6.6%, on average.
Another worthwhile option is B&G Foods, Inc. BGS, with a Zacks Rank #2 and an Earnings ESP of +1.56%. The Zacks Consensus Estimate for first-quarter 2020 earnings is pegged at 64 cents per share, suggesting growth of 68.4% from the prior-year period’s reported figure. The company, which produces frozen foods and household products, delivered an earnings surprise of 5.4%, on average, in the trailing four quarters and has a VGM Score of A. Shares of the company have gained 28.3% in the past three months.
Nomad Foods Limited NOMD, which has gained 9.6% in the past three months, also deserves a mention. The stock has a Zacks Rank #2 and an Earnings ESP of +6.25%. The Zacks Consensus Estimate for first-quarter 2020 earnings is pegged at 32 cents, indicating growth of 6.7% from the year-ago quarter’s reported figure. This frozen food provider has a trailing four-quarter earnings surprise of 10.7%, on average.
Investors can even count on Kellogg Company K, a ready-to-eat convenience food manufacturer, with a Zacks Rank #2 and an Earnings ESP of +1.08%. The company has a trailing four-quarter earnings surprise of 8.3%, on average, and returned 6.2% in the past three months. The consensus mark for second-quarter earnings is pegged at 93 cents. Kellogg flaunts a VGM Score of A.
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Kellogg Company (K) : Free Stock Analysis Report
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