Despite the stock market's growth over the past two years, consumer staples companies have had a tough time keeping up. Driven by "riskier" assets such as financial, energy and technology stocks, the resulting rise in stock prices seems to have past the makers of shampoo, food and beverage products by. So far, the consumer goods sector has been the worst performing market segment in 2011. However, with the recent uncertainty in the Middle East, combined with the various domestic and global issues facing the economy, it may be time for investors to give the safe sector ago.

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Shampoo, Razors and Mac-n-Cheese
With the return of volatility, it might be time for investors to look towards their pantries for stocks. After all, the companies that produce food, juice and soap may not be exciting, but they tend to be very predictable, and, for the most part, generate positive free cash flows. Their non-cyclical nature makes them perfect additions for a portfolio looking for shelter. Consumers can always put off the purchase of a shiny new 55-inch 3D TV, but toothpaste is much harder to live without. Unlike other sectors of the economy, the demand for the products made by consumer staples companies does not generally slow, and they tend to have a low price elasticity of demand. This produces slow and steady growth that ignores much of the wild ebbs and flows of the consumer spending cycles as they react to the health of the overall economy.

Additionally, consumer staples companies are a great way to hedge yourself against higher commodity prices. Many have increased supply chain and internal efficiencies and have also reduced portions and packaging sizes. These companies can also handle cost inflation is by raising prices. As commodity prices increase, these companies can pass that rise on to the consumer. Consumers will generally complain about any price increases, but odds are they will not give up their morning coffee or quit washing their hair. Finally, consumer staples stability allows many to pay outsized dividends. These dividends help cushion any downturn in the stock market and boost returns in an upswing. Overall, the sector provides exactly the kind of qualities needed for times of trouble or insecurity.

Filling the Pantry and Portfolio
Given all the uneasiness facing the markets, consumer staples are an attractive option for investors looking at ways to stay dry in the storm. With stocks in the sector trading for P/E ratios cheaper than the broad market, adding the sector maybe a great value proposition as well. Investors looking for broad plays on the market segment might want to look at adding the Vanguard Consumer Staples ETF (NYSE:VDC). The fund follows 109 different companies, including soft drink giant Pepsi (NYSE:PEP) and packaged food Kellogg's (NYSE:K) and yields 2.58%. For international consumer staples exposure, investors can use the iShares S&P Global Consumer Staples (NYSE:KXI). Individually, there's plenty of choice as well.

Selling toilet tissue and diapers is a boring business, but those paper products have been driving earnings growth at Kimberly-Clark (NYSE:KMB). One of the company's hallmarks has been its ability to maintain margins in high inflationary years dating all the way back to 1986. Recently, the company received several analyst upgrades and sports a healthy 4.4% yield.

Companies with superior brand recognition and size are able to pass along higher commodity costs to consumers easier than others. Many of HJ Heinz's (NYSE:HNZ) are leaders in their market categories, and the company should be able to pass on commodity increases easily. However, the company isn't resting on its laurels. The company has expanded into emerging markets, such as China and Brazil, with timely acquisitions of FoodStar and Quero Brands. Shares of the ketchup maker yield 3.7%.

With the price of Arabica coffee and the iPath DJ-UBS Coffee ETN (NYSE:JO) hitting new record highs, many consumers are feeling the pinch in their morning cup of joe. However, that shouldn't worry investors in The J. M. Smucker (NYSE:SJM). Its Dunkin Donut brand has achieved cult status, and price increases should be easily absorbed. If not, they consumers can always trade down to its Folgers brand. Shares of Smucker's yield 2.5%.

The Bottom Line
As the markets continue to show signs of volatility and various global issues put pressures on the economy, investors may want to add a bit of a hedge. The consumer staples sector offers big dividends, earnings stability and the safety that investors crave. (To learn more, see our Guide To Investing In Consumer Staples.)

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