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8 Consumer Staples Stocks That Offer Good Value in 2020

8 Consumer Staples Stocks That Offer Good ValuePosted on Monday, July 20th, 2020 by MarketBeat Staff

Chances are you’ve been spending more time at home than usual. You may also be spending more of your budget on some creature comforts that might normally make it on your shopping list. These are the consumer staples that you rely on every day.

And that’s what makes the consumer staples one of the most interesting sectors for investors.

For starters, consumer staples are defensive stocks. They are stocks that tend to perform well when the economy is doing well or when it is performing poorly. That’s because they are essentials like toilet paper, packaged foods and beverages, even alcohol and tobacco.

Now the opposite side of this coin is that the price you pay for these items is somewhat fixed. And that means these stocks don’t fit the definition of growth stocks. But the Covid-19 pandemic has changed that equation a little bit. It’s not that people are necessarily paying more for these items. But they are buying more of these items.

And this means that consumer staples are having their moment in the sun. However, it also means that right now there are several consumer staples that are looking a little pricey. But if you know anything about these stocks, you know that many of these companies are mature companies that pay a respectable, and safe, dividend.

Fortunately, there are still several stocks that appear to have room to grow and offer a nice dividend for investors.

#1 - Ingredion (NYSE:INGR)

Ingredion logo

Ingredion (INGR)

P/E Ratio: 14.64

Dividend Yield: 3.05%

You may not be familiar with Ingredion (NYSE: INGR), but now might be a good time to get introduced to this $6 billion company. The company is based in the Chicago area and provides ingredients to customers in over 120 countries. It doesn’t make the consumer staple products but provides some of the healthy ingredients that go in them.

Knowing where your ingredients come from is a bedrock of healthy eating. Ingredion uses grains, fruits, vegetables, and other plant-based materials to develop ingredients for food, beverages, animal nutrition, brewing, and other products.

The consumer staples sector has a current P/E ratio of 19.7. Ingredion comes in below that which suggests the stock is not overvalued. And although the stock has a consensus rating of Hold from six

About Ingredion
Ingredion Incorporated, together with its subsidiaries, produces and sells starches and sweeteners for various industries. The company operates through four segments: North America, South America, Asia Pacific and Europe, and Middle East and Africa. It offers sweetener products comprising glucose syrups, high maltose syrups, high fructose corn syrups, caramel colors, dextrose, polyols, maltodextrins, glucose and syrup solids, as well as food-grade and industrial starches, and biomaterials. Read More 

Current Price: $79.64
Consensus Rating: Hold
Ratings Breakdown: 2 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $95.40 (19.8% Upside)



#2 - Kellogg Company (NYSE:K)

Kellogg logo

Kellogg (K)

P/E Ratio: 22.80

Dividend Yield: 3.33%

Kellogg Company (NYSE: K) may be best known as the cereal company, but it’s become so much more than that. Company executives said that global demand for its brands saw significant growth in March as consumers followed stay-at-home mandates and wanted to ensure they had their favorite packaged goods.

However, the company’s sales were down in the first quarter on a year-over-year (YoY) basis. But that’s to be expected because every stock was selling off in the initial days of the Covid-19 pandemic. On the other hand, the company’s operating profit posted an impressive gain, rising over 20% to $459 million. This raised the company’s diluted earnings per share (EPS) to climb 23.2% to $1.01. 

It remains to be seen if the company’s pivot to healthier fare will pay off. Currently the company has a P/E ratio that is above the sector average. And the 16 analysts that cover the company give it a price target that suggests the stock may be priced about right. However, the company rewards investors with a generous dividend yield of 3.33% with 15 years of consecutive dividend growth.

About Kellogg
Kellogg Company, together with its subsidiaries, manufactures and markets ready-to-eat cereal and convenience foods. The company operates through U.S. Snacks, U.S. Morning Foods, U.S. Specialty Channels, North America Other, Europe, Latin America, and Asia Pacific segments. Its principal products include crackers, cookies, crisps and other savory snacks, toaster pastries, cereal bars, granola bars and bites, fruit-flavored snacks, ready-to-eat cereals, frozen waffles, veggie foods, and noodles. Read More 

Current Price: $69.52
Consensus Rating: Hold
Ratings Breakdown: 7 Buy Ratings, 8 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $70.86 (1.9% Upside)



#3 - Kimberly Clark (NYSE:KMB)

Kimberly Clark logo

Kimberly Clark (KMB)

P/E Ratio: 20.94

Dividend Yield: 2.97%

Kimberly Clark (NYSE: KMB) has rallied over 25% since the selloff in March. This just goes to show that the company’s portfolio of personal care products continues to be in high demand. But there’s another reason to own the stock. As more hospitals are opening for elective surgeries, it should provide a boost for the company’s surgical and medical instruments division.

The company is beginning to see the benefit of a restructuring plan that it began in 2018. The company is already reporting higher operating margins even as the company has had to put the plan on hold due to the pandemic.

The P/E ratio and current price target from 11 analysts suggest that investors shouldn’t be expecting significant growth. However, you’re buying a blue-chip stock like Kimberly Clark for the dividend. And the company delivers in that regard. In addition to the dividend yield that is right around 2.97%, it has increased the payout every year for the last 47 years. That can’t be overlooked at a time when many companies are reducing or suspending dividends.

About Kimberly Clark
Kimberly-Clark Corporation, together with its subsidiaries, manufactures and markets personal care, consumer tissue, and professional products worldwide. It operates through three segments: Personal Care, Consumer Tissue, and K-C Professional. The Personal Care segment offers disposable diapers, training and youth pants, swimpants, baby wipes, feminine and incontinence care products, and other related products under the Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Kotex, U by Kotex, Intimus, Depend, Plenitud, Poise, and other brand names. Read More 

Current Price: $157.26
Consensus Rating: Hold
Ratings Breakdown: 4 Buy Ratings, 5 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $150.11 (-4.5% Upside)



#4 - Mondelez International (NASDAQ:MDLZ)

Mondelez International logo

Mondelez International (MDLZ)

P/E Ratio: 20.79

Dividend Yield: 2.16%

Mondelez International (NASDAQ: MDLZ) offers one of the best opportunities for growth in this sector. The multinational company is based in Chicago. Mondelez’s current price-to-earnings ratio of 20.79 suggests that MDLZ stock is a good value. However, 16 analysts have given the company’s stock a price target of $61.25. This would give investors a gain of over 15%.

MDLZ stock has been on an uptrend since the beginning of 2019. Significantly, the selloff in March seemed to set a floor for the stock that was significantly above the $39 price that was established at the end of 2018.

The company has a nice dividend of 2.16%. It has six consecutive years of dividend growth. Mondelez currently pays out a dividend of 28 cents per quarter. It last increased its dividend in July 2019 so investors should pay close attention to see if the company is going to provide another increase.

About Mondelez International
Mondelez International, Inc, through its subsidiaries, manufactures and markets snack food and beverage products worldwide. It offers biscuits, including cookies, crackers, and salted snacks; chocolates; and gums and candies, as well as various cheese and grocery, and powdered beverage products. The company's primary snack brand portfolio includes Cadbury, Milka, and Toblerone chocolates; Oreo, belVita, and LU biscuits; Halls candies; and Trident gums and Tang powdered beverages. Read More 

Current Price: $55.60
Consensus Rating: Buy
Ratings Breakdown: 18 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $62.24 (11.9% Upside)



#5 - JM Smucker (NYSE:SJM)

J M Smucker logo

JM Smucker (SJM)

P/E Ratio: 15.53

Dividend Yield: 3.28%

JM Smucker (NYSE: SJM) is presenting investors with a risk-reward proposition. The company has been active in the acquisition game recently. On the one hand, this has transformed the company from a well-known company known for its jams and jellies.

But with these acquisitions, the company is taking on some risk. Specifically, the stock is not generating the revenue and free cash flow that some investors like to see. That may be a reason SJM stock currently has a P/E ratio that is below the sector average.

However, Smucker reported operating income of $1.08 billion during the past four quarters which was better on a year-over-year basis from the $930 million. This may be a reason that the 12 analysts who have issued opinions on the stock give it a price target that suggests investors can get about 7% growth.

But Smucker is one of the bluest of the blue-chip stocks that you can buy. The company’s current dividend is 3.28%. And the company has increased its dividend in each of the last 18 consecutive years.

About J M Smucker
The J. M. Smucker Co engages in the manufacture and marketing of branded food and beverage products. It operates through the following segments: U.S. Retail Coffee, U.S. Retail Consumer Foods, U.S. Retail Pet Foods, and International and Away From Home. The U. S. Retail Coffee segment includes the domestic sales of Folgers, Dunkin Donuts, and Cafe Bustelo branded coffee. Read More 

Current Price: $111.05
Consensus Rating: Hold
Ratings Breakdown: 1 Buy Ratings, 9 Hold Ratings, 2 Sell Ratings.
Consensus Price Target: $113.25 (2.0% Upside)



#6 - Pepsico (NASDAQ:PEP)

PepsiCo logo

Pepsico (PEP)

P/E Ratio: 27.35

Dividend Yield: 3.05%

During the pandemic, many investors thought that Pepsico (NASDAQ: PEP) might get a lift from consumers stocking up on their sugary beverages. That didn’t happen. But the good news for investors is that the company is a lot more than just the Pepsi brand. The company has a very good business in snack foods, and that segment did very well.

Overall, the company’s organic revenue grew 5.2% with $12.9 billion of sales. This easily beat analysts’ expectations for revenue of $12.7 billion. And those analysts are giving the company a price target of $143. This would give PEP stock a gain of just over 7%.

Analysts may be cheering the company’s willingness to spend more on advertising. But we’ll have to wait and see how that plays out. What is more intriguing is that the company’s new CEO Ramon Laguarta is more committed to diversifying the company into more healthy alternatives.

And in addition to a dividend yield of 3.05%, the company is a dividend aristocrat with a record of increasing its dividend for 48 consecutive years.

About PepsiCo
PepsiCo, Inc operates as a food and beverage company worldwide. The company's Frito-Lay North America segment offers branded dips; Cheetos cheese-flavored snacks; and Doritos tortilla, Fritos corn, Lay's potato, Ruffles potato, and Tostitos tortilla chips. Its Quaker Foods North America segment provides cereals, rice, pasta, mixes and syrups, granola bars, grits, oat squares, oatmeal, rice cakes, simply granola, and side dishes under the Aunt Jemima, Cap'n crunch, Life, Quaker Chewy, Quaker, and Rice-A-Roni brands. Read More 

Current Price: $136.74
Consensus Rating: Buy
Ratings Breakdown: 10 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $142.87 (4.5% Upside)



#7 - Foot Locker (NYSE:FL)

Foot Locker logo

Foot Locker (FL)

P/E Ratio: 14.98

Dividend Yield: 5.54%

You might not consider Foot Locker (NYSE: FL) to be a consumer staple stock. But the recent trend towards athleisure is changing the market. Erinn Murphy, an analyst with Piper Jaffray has termed shoe brands as “social currency”. And it’s a currency that’s growing with a key female demographic.

But that’s not to push aside the teenage audience. Piper Jaffray conducted a 2019 survey that says the average teenager owns eight pairs of sneakers. And 30% of those teens purchase a new pair every month. That leads one to believe that even in a recession, a new pair of kicks may remain an essential product.

The company’s stock appears to be slightly undervalued, and analysts give it a price target of $34.37 which would be a gain of nearly 20%. And the company pays out a dividend that has grown for the last nine years and appears very safe with a payout ratio that is in the low 30% range.

About Foot Locker
Foot Locker, Inc, through its subsidiaries, operates as an athletic shoes and apparel retailer. The company operates in two segments, Athletic Stores and Direct-to-Customers. The Athletic Stores segment retails athletic footwear, apparel, accessories, and equipment under various formats, including Foot Locker, Kids Foot Locker, Lady Foot Locker, Champs Sports, Footaction, Runners Point, Sidestep, and SIX:02. Read More 

Current Price: $27.48
Consensus Rating: Hold
Ratings Breakdown: 9 Buy Ratings, 10 Hold Ratings, 2 Sell Ratings.
Consensus Price Target: $33.53 (22.0% Upside)



#8 - Costco (NASDAQ:COST)

Costco Wholesale logo

Costco (COST)

P/E Ratio: 39.00

Dividend Yield: 0.86%

We wrap things up by looking at another way to play the consumer staples segment. Costco (NASDAQ: COST) is a club-based warehouse retailer that seems to be front and center in the nationwide mask debate these days. But what investors need to know is that it has 770 locations and is far and away the leader in this small sector.

COST’s P/E ratio of 39 makes it one of the more expensive stocks in this sector. And the consensus price target suggests the stock is priced about right. But when you consider that Costco is managing to not only hold its own but continue to grow with Walmart (NYSE: WMT) and Amazon (NASDAQ: AMZN) as competitors. In the company’s most recent fiscal year, it posted same-store sales (stripped of gasoline sales) that grew 6.8%. This is perhaps one of the most important metrics that analysts look at to measure the health of a company.

And you’ll benefit from a reliable dividend that the company has increased for the last 16 consecutive years.

About Costco Wholesale
Costco Wholesale Corporation, together with its subsidiaries, operates membership warehouses. It offers branded and private-label products in a range of merchandise categories. The company provides dry and packaged foods, and groceries; snack foods, candies, alcoholic and nonalcoholic beverages, and cleaning supplies; appliances, electronics, health and beauty aids, hardware, and garden and patio products; meat, bakery, deli, and produces; and apparel and small appliances. Read More 

Current Price: $340.91
Consensus Rating: Buy
Ratings Breakdown: 20 Buy Ratings, 10 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $333.96 (-2.0% Upside)

 

Consumer staple stocks aren’t the sexy technology stocks that have a tendency to go up simply because they are technology stocks. The problem that you’ve likely experienced is that what goes up frequently goes down. And just as fast as it goes up.

But what consumer staples may lack in style, they more than make up for in substance. And this substance can give investors a feeling of certainty in uncertain and volatile signs. And that’s why these stocks deserve a place in your portfolio. They may not be the stocks you brag about when you’re sitting at the nineteenth hole, but they’re stocks that will help you rest easy during volatile times.

In addition to being defensive, non-cyclical stocks, consumer staples frequently pay out a solid dividend. Because of the dividend, these stocks tend to outperform many stocks in down markets. In fact, many of these stocks belong to the exclusive club of Dividend Aristocrats, which means the companies have increased the dividend payout every year for at least 25 consecutive years.

10 Stocks to Buy On Fears of a Second Coronavirus Wave

Ever since the U.S. economy began to re-open (and honestly before that), there was concern over the impending “second wave” of the novel coronavirus. And although the second wave of the virus was not expected to hit until the fall, the concerns have been escalating as case numbers rise in multiple states.

And despite the Trump administration’s vehement statements that the economy would not shut down, we learned on February 25 that Texas was now pausing, and in some cases rolling back, its reopening measures in an effort to stem the spread of the virus.

And this is happening as the Centers for Disease Control (CDC) is now saying that it’s possible that 20 million Americans may have the coronavirus based on a sample of blood tests that are showing who has the antibodies in their system.

For its part, the stock market reacted sharply to the move. It was a move that undoubtedly frustrated many weary investors. In fact, you might be among those that have had just about enough of the Covid-19 market. I understand, I’m there too.

But, institutional investors are forward-looking. And right now, they don’t like what they. So stocks are having another broad selloff. However, in the midst of any selloff, there is money to be made. And the good news for investors is that many of the same stocks that were good buys in March, are still the stocks to buy right now. And while some of these stocks fit the classic definition of defensive stocks, you’ll find a few genuine growth stocks included on this list as well.

View the "10 Stocks to Buy On Fears of a Second Coronavirus Wave" Here.






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