S&P 500   4,538.43
DOW   34,580.08
QQQ   383.13
S&P 500   4,538.43
DOW   34,580.08
QQQ   383.13
S&P 500   4,538.43
DOW   34,580.08
QQQ   383.13
S&P 500   4,538.43
DOW   34,580.08
QQQ   383.13

3 Consumer Staples Stocks to Buy in a Volatile Market

Wednesday, August 18, 2021 | Sean Sechler
3 Consumer Staples Stocks to Buy in a Volatile MarketWith volatility rearing its ugly head again in equity indices this week, it’s a good idea for investors to refresh their playbook for tumultuous market conditions. Although dips continue to be bought with the market trading at or near record highs, the poor market breadth should probably have investors on their toes going forward. Adding shares of stocks that can either preserve your capital or even provide alpha in a volatile market is certainly a valuable strategy for investors to consider at this time. The only problem is finding those pockets of strength in the market that smart money tends to park their capital in during a flight to safety. 

One sector sees inflows time and time again when the market starts to flash warnings signs of volatility, and that is the consumer staples sector. These are companies that produce and sell the everyday items that consumers will purchase regardless of economic conditions, which means their earnings are fairly stable and predictable. It might make sense to start increasing exposure to consumer staples stocks at this time after the truly monumental run the market has been on over the last year, which is why we’ve put together the following list of 3 consumer staples stocks to buy in a volatile market. Let’s take a deeper look below.

Philip Morris International (NYSE: PM)

First on our list of consumer staples stocks to buy amidst market volatility is Philip Morris International, the largest publicly traded manufacturer and marketer of tobacco products. While you might be thinking that tobacco consumption is on the decline, this stock’s price action this year says otherwise. Phillip Morris has rallied over 25% year-to-date and could be in for even more gains ahead if money continues to flow to the top names in the consumer staples sector. The company has market-leading brands that include Marlboro, L&M, Philip Morris, Chesterfield, Parliament, and Virginia Slims that are sold in countries around the world, which is great as those strong brands lead to consistent earnings for the company.

Keep in mind that Philip Morris has heavy exposure to markets outside of the United States where cigarette consumption is holding up well, another positive for the stock. This is also a plus given that the Biden Administration wants to decrease the amount of nicotine content in products that are sold stateside. Finally, the stock offers a very attractive 4.69% dividend yield and trades at a reasonable valuation, making it a fantastic option in the sector to consider adding now.

Pepsico (NASDAQ: PEP)

I’ve mentioned a few reasons why Pepsico stock is a strong option for investors to consider before, which included the company’s very strong Q2 earnings, the fact that it’s a strong reopening play, and that it’s a lower-volatility investment given the company’s defensive qualities. All of these reasons that supported adding shares of the stock still hold true today, and with Pepsico close to breaking out to new all-time highs it might just be the best consumer staples stock to consider adding now. As one of the largest food and beverages companies in the world, Pepsico’s brands are incredibly strong and are easy to bank on for consistent earnings.

Many investors probably don’t realize how strong Pepsico’s snack business is, as the company’s Lay’s brand is the world’s best-selling snack food brand. The company has over 10 times the volume share of the next-largest snack food competitor, which is the type of market-leading dominance that prospective shareholders love to see. Finally, the fact that Pepsico has a goal of achieving $1 billion in annual cost savings and productivity gains through 2023 could mean that earnings are only going to get stronger for the company going forward.

Procter & Gamble (NYSE: PG)

The fact that this leading consumer staples company warned investors of significant cost inflation that could result in roughly $1.9 billion in after-tax headwinds for fiscal 2022 in its recent Q4 earnings release yet has still been holding up well in a volatile tape is a testament to the strength of Procter & Gamble’s business. It’s a leading consumer products company that supplies some of the most popular household and personal care products in the world and is the type of company that investors can feel comfortable adding to their long-term plans regardless of what is happening in the market.

The cost inflation warning isn’t the end of the world for the company as it can try to increase its prices to help offset the impacts, and the company has plenty of room to grow in emerging markets like China and Latin America going forward. It wasn’t all bad news in the company’s Q4 earnings report, as Procter & Gamble reported a net sales increase of 7% year-over-year to reach $18.9 billion along with diluted EPS up 6% year-over-year at $1.13. Investors should also note the 6% organic sales growth that took place during FY 2021, which could be a sign of more market share gains to come. Finally, the stock is a great option for income investors given the company’s Dividend Aristocrat status, as Procter & Gamble has increased its dividend for 64 consecutive years.

Should you invest $1,000 in PepsiCo right now?

Before you consider PepsiCo, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and PepsiCo wasn't on the list.

While PepsiCo currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The 5 Stocks Here


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
PepsiCo (PEP)3.1$164.71+2.5%2.61%28.06Hold$162.77
Philip Morris International (PM)2.6$89.38+1.8%5.59%15.52Buy$106.75
Procter & Gamble (PG)3.0$149.88+1.8%2.32%27.40Hold$149.53
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