Wall Street has remained volatile over the last seven to eight weeks on account of the coronavirus outbreak plaguing the country. Nevertheless, coronavirus cases in the United States seem to be stabilizing. Despite the good news, the stock market is not completely out of the woods yet.
The devastating effect of the deadly virus on the U.S. economy and corporate earnings is yet to be ascertained. Although the overall market movement is likely to stay northbound, we should be careful to rebalance our portfolio to mitigate short-term fluctuations.
Meanwhile, a few consumer staple stocks with a favorable Zacks Rank have popped in the past seven trading days. Moreover, these stocks have recently witnessed upward estimate revisions for 2020 earnings per share (EPS).
Notably, market mayhem and possibility of a near-term recession as warned by several economists and financial experts have also failed to deter these stocks. Investors can take a look at these stocks as these are likely to protect their portfolio against market volatility.
Why Consumer Staple Stocks?
The consumer staples sector includes companies that provide necessities and products for daily use. This makes the sector defensive in nature. Therefore, this has always been a go-to place for investors, who want to play it safe during extreme market fluctuations. Adding stocks from the consumer staples basket lends more stability to portfolios during uncertain market conditions.
The stock market volatility is likely to continue in the near term as the coronavirus pandemic is showing little signs of abating. Several countries are currently under full or partial lockdown in order to enforce social distancing. This has caused significant disruption in global economic activities resulting in a global recession threat. At this juncture, it will be prudent to invest in investment in consumer staple stocks.
Notably, in the past month, the S&P 500 index fell 7.5%. However, out of the 11 broad sectors of the benchmark index, the Consumer Select Sector SPDR (XLP) declined 6.4%. The XLP’s decline is the third lowest following a 2.9% drop in the Health Care Select Sector SPDR (XLV) and 4.2% fall in the Technology Select Sector SPDR (XLK).
Our Top Picks
We have narrowed down our search to five consumer staple stocks that have surged in the past seven days and witnessed strong EPS estimate revisions in the past 60 days. Notably, the past 60 days were the period when Wall Street witnessed one of the worst financial disasters in its history. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past seven trading days.
Grocery Outlet Holding Corp. GO owns and operates a chain of grocery stores primarily in the United States. The Zacks Rank #1 company has an expected earnings growth rate of 12.7% for the current year. The Zacks Consensus Estimate for current year earnings has improved by 9.9% over the past 30 days. The stock price has appreciated 5.9% in the past seven trading days.
SunOpta Inc. STKL offers an integrated business models in the natural and organic food, supplements and health and beauty markets. The Zacks Rank #1 company has an expected earnings growth rate of 59.6% for the current year. The Zacks Consensus Estimate for the current year earnings has improved 40% over the past 30 days. The stock price has advanced 9.4% in the past seven trading days.
National Beverage Corp. FIZZ develops, produces, markets, and sells a portfolio of waters, juices, energy drinks, and carbonated soft drinks primarily in the United States and Canada. The Zacks Rank #1 company currently has expected negative earnings growth for the current year. However, the Zacks Consensus Estimate for the current year earnings has improved 1.2% over the past 60 days. The stock price has rallied 13.9% in the past seven trading days.
Conagra Brands Inc. CAG is one of the leading branded food company of North America. It operates through Grocery & Snacks, Refrigerated & Frozen, International, Foodservice and Pinnacle Foods segments. The Zacks Rank #2 company has an expected earnings growth rate of 10% for the current year. The Zacks Consensus Estimate for the current year earnings has improved 7.8% over the past 30 days. The stock price has jumped 11% in the past seven trading days.
General Mills Inc. GIS manufactures and markets branded consumer foods worldwide. The company operates in five segments: North America Retail, Convenience Stores & Foodservice, Europe & Australia, Asia & Latin America and Pet. The Zacks Rank #2 company has an expected earnings growth rate of 7.5% for the current year. The Zacks Consensus Estimate for the current year earnings has improved 2.4% over the past 30 days. The stock price has gained 3.1% in the past seven trading days.
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