The novel coronavirus, which has infected more than a million people worldwide, claiming more than 70,000 lives, has endangered the global economy. As social distancing remains the only way to contain the growing spread, people around the world have been confined indoors. Inevitably, coronavirus and its impact have resulted in supply-chain disruptions, significantly lower traffic across stores and restaurants, and stringent travel restrictions.
Quite obviously, COVID-19 has hit many sectors like retail, aerospace, restaurants, leisure and construction, to name a few. On the contrary, the Consumer Staples space appears to be in a better shape, as consumers’ panic-buying trends amid the crisis have spiked up the demand for essentials that are moving out of shelves faster than usual. Even in general, consumer staple stocks are considered safer as they are less volatile, carry low beta and offer better yields.
No wonder, the Consumer Staples Select Sector SPDR Fund XLP has been performing much better than the S&P 500 in this critical situation. Though the Consumer Staples Select Sector has tumbled 8.6% so far this year, it has performed much better than the S&P 500’s decline of 17.3%. In fact, the Consumer Staples Select Sector is in the green territory and has registered an increase of 7.5% over the past five trading sessions.
So this Easter, get ready to beat the coronavirus blues with some stocks from the defensive Consumer Staples sector.
Consumer Staples a Defensive Zone
Amid the ongoing business disruptions, there are companies in the Consumer Staples universe that are witnessing burgeoning demand for their products. With rising coronavirus cases, people are taking extra precautions, working remotely and dining at home. These have led to a high demand for groceries, packaged water, hand sanitizers, tissue papers, cleaning wipes, infant supplies and related staples.
This makes the role of several consumer product companies such as Kimberly-Clark KMB important. Also, companies like Diageo have offered their distillers to produce alcohol-based hand sanitizers. In fact, demand for most of the products provided by this industry's participants remains fairly stable. This makes the industry a defensive play, while the global markets continue to spiral down. This space has always been a go-to place for investors who want to play it safe during extreme market fluctuations.
From this otherwise battered market, we have picked five Consumer Staple stocks with solid growth prospects. These stocks carry a Zacks Rank #1 (Strong Buy) or #2 (Buy) and reflect strong fundamentals. They also possess an impressive earnings surprise trend and flaunt a favorable long-term earnings growth rate. Further, most of the stocks have seen an uptrend in their earnings estimates for the current financial year over the past 30 days. Moreover, some of them have delivered positive returns in the year-to-date period, while all of them have gained at least 15% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
5 Stocks Worth Buying
The Clorox Company CLX sports a Zacks Rank #1. This provider of cleaning, home care and other household products across the United States and international markets possesses an expected long-term earnings growth rate of 5.2%. Further, the company has delivered a positive earnings surprise for three straight quarters. Encouragingly, Clorox’s shares have gained 17.9% so far this year and 17.7% over the past year. The Zacks Consensus Estimate for the current financial year earnings has improved 3.2% in the past 30 days.
Grocery Outlet Holding Corp. GO, which has returned 10.3% year to date, operates a chain of grocery stores in the United States. This Zacks Rank #1 company offers products in various categories, such as grocery, dairy, refrigerated and frozen, floral, beer and wine, general merchandise, health and beauty, fresh meat and seafood, and organic. The Zacks Consensus Estimate for its current financial year earnings has improved 9.9% in the past 30 days. The company has an expected long-term earnings growth rate of 10.8% and its shares have rallied 25% in a year. Markedly, Grocery Outlet Holding has delivered a positive earnings surprise in the trailing three quarters.
Helen of Troy Limited HELE is also worth a bet. This Zacks Rank #2 company offers consumer products through Housewares, Health & Home and Beauty segments. Notably, the company’s bottom line exceeded the Zacks Consensus Estimate by almost 19%, on average, in the trailing four quarters. It has an expected long-term earnings growth rate of 5.9% and its shares have appreciated 17.9% over the past year.
Campbell Soup Co. CPB manufactures and markets high-quality branded convenience food and beverages. It operates through Meals & Beverages and Snacks segments. The Zacks Consensus Estimate for the current financial year earnings has improved 3.8% in the past 30 days. The company, which has gained 17.9% in a year, has an expected long-term earnings growth rate of 7.2%. Also, this Zacks Rank #2 stock has outperformed earnings estimates by 12%, on average, in the trailing four quarters.
Investors can also count on The Hain Celestial Group, Inc. HAIN, which produces and sells various natural and organic food as well as personal care products, with operations in the United States and internationally. This Zacks Rank #2 company has delivered back-to-back earnings surprises in the past two quarters and seen its shares rally 15% in the past year. The Zacks Consensus Estimate for current financial year earnings has moved up by 1.4% in the past 30 days.
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Kimberly-Clark Corporation (KMB) : Free Stock Analysis Report
The Hain Celestial Group, Inc. (HAIN) : Free Stock Analysis Report
Campbell Soup Company (CPB) : Free Stock Analysis Report
The Clorox Company (CLX) : Free Stock Analysis Report
Helen of Troy Limited (HELE) : Free Stock Analysis Report
Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports
Grocery Outlet Holding Corp. (GO) : Free Stock Analysis Report
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