Top Consumer Staples Stocks for March 2023

The consumer staples sector is composed of companies that produce and sell items considered essential for everyday use. Consumer staples products include household goods, food, beverages, hygiene products, and other items that individuals are either unwilling or unable to eliminate from their budgets even in times of financial trouble. These companies are viewed as noncyclical and able to maintain stable growth regardless of the state of the economy. Some big names in the sector include Procter & Gamble Co., Coca-Cola Co., and General Mills Inc.

Consumer staples stocks, as represented by the Consumer Staples Select Sector SPDR ETF (XLP)—have fallen 1% during the past 12 months compared to the 3% decline of the Russell 1000.

Here are the top three consumer staples stocks with the best value, the fastest growth, and the most momentum. All figures are as of Feb. 28.

Best Value Consumer Staples Stocks

These are the consumer staples stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you're paying less for each dollar of profit generated.

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• Marfrig Global Foods S.A.: Marfrig Global Foods is a Brazil-based company that processes and distributes animal protein sources like sheep, cattle, and fish and ready-to-eat products like frozen vegetables.
• JBS S.A.: JBS is a food processing company in Brazil that offers animal products such as pork, beef, poultry, and fish. On Feb. 7, the company said it would invest $20 million in its lamb unit in Australia to meet growing demand.
• Adtalem Global Education Inc.: Adtalem Global is a healthcare education company providing post-secondary degrees and other certifications in nursing, psychology, business, criminal justice, and veterinary medicine. In February the company reported net income increased by 35% in the final quarter of 2022 despite a 2% decline in revenue from the year before.

Fastest Growing Consumer Staples Stocks

These are the top consumer staples stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

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• Celsius Holdings Inc.: Celsius Holdings produces pre and post-workout energy drinks and other liquid supplements under brands including Celsius Heat, Celsius BCAA, and Celsius-On The-Go. Last August, Celsius entered a long-term distribution deal with PepsiCo, making PepsiCo the company's primary distributor in exchange for an 8.5% ownership stake in Celsius. Note that Celsius Holdings doesn't have an EPS growth figure in the table above because EPS was negative in the latest quarter.
• Hims & Hers Health Inc.: Hims and Hers is a health and wellness company that offers a telehealth platform that enables online access to prescription fulfillment, consultations with healthcare professionals, and consumer-based educational programs. Note that Hims & Hers Health doesn't have an EPS growth figure in the table above because EPS was negative in the latest quarter.
• Sendas Distribuidora S.A.: Sendas Distribuidora is a wholesale self-service company. Store items include food, beverages, cleaning supplies, pet products, and appliances. It is also the second largest retailer in Brazil.

Consumer Staples Stocks With the Most Momentum

These are the consumer staples stocks that had the highest total return over the past 12 months.

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• e.l.f. Beauty Inc.: e.l.f. Beauty produces and sells skincare and cosmetic products under the brands e.l.f SKIN, e.l.f. Cosmetics, Keys Soulcare, and Well People. The company's net income tripled on revenue growth of 49% in the last three months of 2022.
• New Oriental Education & Technology Group Inc.: New Oriental Education & Technology is a private education provider based in Beijing, China. The company provides testing preparation, online education, and oversea education consulting. In the quarter ending Nov. 30—the most recent quarter for which we have data—the company recorded net income of $17 million, rebounding from a $900 million loss the year before.
• TAL Education Group: TAL Education Group is a Chinese-based smart learning provider that offers in-person and online tutoring services for grades K-12.

Advantages of Consumer Staples Stocks 

Several key advantages of consumer staples stocks include stability, growing dividends, and lower volatility.

Stability: Consumer staples stocks typically generate consistent earnings as they offer products and services that remain in demand irrespective of the economy's health. Consumers will always need to purchase household goods, toiletries, tobacco, and food, even during periods of declining discretionary income.

Growing Dividends: Given that consumer staples stocks generate consistent profits, they usually pay investors steady dividends. Indeed, many names in the group are also dividend aristocrat stocks—companies in the S&P 500 that have raised their dividend consecutively for 25 years. Moreover, the XLP ETF yields 2.42%, considerably above the 1.69% dividend yield paid by the average S&P 500 company.

Lower volatility: During periods of economic uncertainty, consumer staples stocks can help investors minimize risk as they typically display lower levels of volatility compared to other sectors. For instance, if the broader stock market falls 2%, the average consumer staples stock may fall by about half that amount.

Cons of Consumer Staples Stocks

Two key disadvantages of consumer staples stocks include slower growth and changing consumer preferences.

Slower Growth: During times of economic expansion, the group often underperforms growth companies, such as fast-moving technology stocks. Investors who overweight consumer staples names in their portfolio during bull markets may miss out on sizeable market gains in other sectors. 

Changing Consumer Preferences: Many consumer staples stocks are established companies that rely on consistent consumer spending patterns. Changing preferences, such as a move to online shopping and the uptake of specialty brands, have the potential to disrupt the sector.

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