5 Consumer Staples Stocks to Buy as Inflation Rises in February
Volatility has returned to Wall Street after a solid rally in the first two months of the year. Inflation rose once again in February, dampening investors’ morale on fading hopes of a rate cut anytime soon.
The Labor Department reported last week that the consumer price index (CPI) rose 0.4% sequentially in February, higher than January’s rise of 0.3%. February’s jump was also the most since September 2023, after which inflation declined steadily to fall below 3% before climbing again in January.
Year over year, CPI jumped 3.2% in February after increasing 3.1% in the prior month.
Core CPI, which excludes the volatile energy and food prices, also rose 0.4% sequentially in February and 3.8% from year-ago levels.
Declining inflation saw the Federal Reserve ending its monetary tightening campaign at the end of last year. Investors cheered the decision after the Federal Reserve said it would initiate multiple rate cuts this year after hiking interest rates by 525 basis points since March 2022.
However, the expectations of the Federal Reserve implementing the first rate cut in March have now been dashed as inflation rose again in the first two months of 2024.
The Federal Reserve also said that the central bank officials would closely monitor inflation data and go for a rate cut only when they are confident. Market participants are now expecting the first rate cut not before the Fed’s June FOMC meeting.
Higher interest rates and uncertainty over the timing of the first rate cut could keep markets volatile for a longer period.
Our Choices
Given this situation, it would be wise to invest in five defensive consumer staples, such as The Clorox Company CLX, Grocery Outlet Holding Corp. GO, Molson Coors Beverage Company TAP, Tyson Foods TSN and Pilgrim's Pride Corporation PPC. These have a favorable Zacks Rank and are likely to strengthen one’s portfolio. Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Clorox Company is engaged in the production, marketing and sale of consumer products in the United States. and international markets. CLX sells its products primarily through mass merchandisers, grocery stores and other retail outlets.
The Clorox Company has an expected earnings growth rate of 5.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 21.6% over the last 60 days. CLX presently has a Zacks Rank #2.
Grocery Outlet Holding Corp. is a high-growth, extreme-value retailer of quality, name-brand consumables and fresh products that are sold through a network of independently owned and operated stores. Notably, GO’s stores offer a fun, treasure hunt shopping experience in an easy-to-navigate, “small-box” format of size 15,000-20,000 square feet.
Grocery Outlet has an expected earnings growth rate of 10.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.6% over the last 60 days. GO currently has a Zacks Rank #2.
Molson Coors Beverage Company, the global manufacturer and seller of beer and other beverage products, has an impressive diverse portfolio of owned and partner brands. TAP’s brands include global priority brands such as Blue Moon, Miller Lite, CoorsBanquet, Coors Light, Miller Genuine Draft and Staropramen, as well as regional champion brands like Carling and Molson Canadian.
Molson Coors Beverage Company’s expected earnings growth rate for the current year is 4.2%. The Zacks Consensus Estimate for the current-year earnings has improved 4.6% over the past 60 days. TAP presently carries a Zacks Rank #2.
Tyson Foods is the biggest U.S. chicken company and produces, distributes and markets chicken, beef, pork, as well as prepared foods. TSN’s products are marketed and sold primarily by sales staff to grocery retailers, grocery wholesalers, meat distributors, military commissaries, industrial food processing companies, chain restaurants, international export companies and domestic distributors.
Tyson Foods’expected earnings growth rate for the current year is 74.6%. The Zacks Consensus Estimate for the current-year earnings has improved 23.2% over the past 60 days. TSN currently sports a Zacks Rank #1.
Pilgrim's Pride Corporation is engaged in the processing, production, marketing and distribution of frozen, fresh as well as value-added chicken products. PPC offers its services in the United States, Mexico, France, the Netherlands, Puerto Rico and Mexico through a number of distributors, retailers and food service operators.
Pilgrim's Pride’s expected earnings growth rate for the current year is 68.6%. The Zacks Consensus Estimate for the current-year earnings has improved 14.9% over the past 60 days. PPC presently sports a Zacks Rank #1.
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The Clorox Company (CLX) : Free Stock Analysis Report
Molson Coors Beverage Company (TAP) : Free Stock Analysis Report
Tyson Foods, Inc. (TSN) : Free Stock Analysis Report
Pilgrim's Pride Corporation (PPC) : Free Stock Analysis Report
Grocery Outlet Holding Corp. (GO) : Free Stock Analysis Report
