Top Consumer Staples Stocks for November 2022

TSN, LW, and GO are top for value, growth, and momentum, respectively

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 of the big names in the sector include The Procter & Gamble Co. , The Coca-Cola Co., and General Mills Inc.

Consumer staples stocks, as represented by the Consumer Staples Select Sector SPDR ETF (XLP)—have risen 3% during the past 12 months compared to the 16% decline of the Russell 1,000. These market performance numbers and all statistics in the tables below are as of Oct. 25, 2022.

Here are the top three consumer staples stocks with the best value, the fastest growth, and the most momentum.

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.

Best Value Consumer Staples Stocks
  Price ($) Market Capitalization (Market Cap) ($B) 12-Month Trailing P/E Ratio
Tyson Foods Inc. (TSN) 67.03 24.1 6.0
Albertsons Companies Inc. (ACI) 20.70 11.1 7.0
Post Holdings Inc. (POST) 88.56 8.4 7.8

Source: YCharts

  • Tyson Foods Inc.: Tyson Foods produces frozen and refrigerated beef, pork, chicken, and other food products. Its operations include breeding stock, contract farmers, feed production, processing, marketing, and transportation. Tyson will pay a quarterly dividend of $0.46 per share on Class A common stock and $0.414 per share on Class B common stock. on Dec. 15 to shareholders as of Dec. 1, 2022.
  • Albertsons Companies Inc.: Albertsons is a drug and food retailer that operates grocery stores such as Kings Food Markets, Tom Thumb, Safeway, Vons, and Acme. The company offers grocery products, fuel, pharmaceuticals, and health items. On Oct. 14, Albertsons and Kroger reached a definitive merger agreement under which Kroger will a buy all of Albertsons' outstanding shares for an estimated enterprise value of $24.6 billion.
  • Post Holdings Inc.: Post Holdings manufactures, markets, and sells consumer packaged goods. The company offers ready-to-eat cereal brands such as Malt-O-Meal, Honeycomb, and Weetabix. The company also sells packaged potato products and ready-to-drink protein shakes.

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.

Fastest Growing Consumer Staples Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
Lamb Weston Holdings Inc. (LW) 84.63 12.2 700.0 14.4
Performance Food Group Co. (PFGC) 49.77 7.7 113.0 56.8
Darling Ingredients Inc. (DAR) 75.86 12.2 5.1 37.7

Source: YCharts

  • Lamb Weston Holdings Inc.: Lamb Weston produces, markets, and distributes frozen potato and appetizer products, primarily under brand names such as Grown in Idaho and Alexia. The company's customers include restaurant chains, schools, connivance stores, and grocery retailers. On Oct. 5, Lamb Weston Holdings said net income surged nearly eightfold year-over-year (YOY) on rising revenue during its first quarter, the company's latest reporting period. A key driver of profits was cost savings in its manufacturing operations, which mitigated the impact inflation.
  • Performance Food Group Co.: Performance Food Group is a food and food service distribution company with operations across the U.S. and Canada. It delivers food and related products to restaurants, businesses, schools, healthcare facilities, and other distributors. On Aug. 17, the company reported that net income more than doubled as net sales increased 56.8% in its fourth quarter, the company's latest reporting period. The company said improvements in customer mix and margins led drover growth in all business segments.
  • Darling Ingredients Inc.: Darling develops and produces sustainable natural ingredients for the food, pet food, animal feed, industrial, fuel, fertilizer and pharmaceutical industries. Its products come from animal by-product streams that are turned into specialty ingredients such as edible fats, feed-grade fats, and animal proteins.

Consumer Staples Stocks With the Most Momentum

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

Consumer Staples Stocks with the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Grocery Outlet Holding Corp. (GO) 34.01 3.3 48
Lamb Weston Holdings Inc. (LW) 84.63 12.2 47
Dollar Tree Inc. (DLTR) 153.90 34.5 47
Russell 1000 Index N/A N/A -16
Consumer Staples Select Sector SPDR ETF (XLP) N/A N/A 3.0

Source: YCharts

  • Grocery Outlet Holding Corp.: Grocery Outlet Holding sells food products through a network of stores across the west coast and the northeastern U.S. Its sells items including produce, refrigerated and frozen foods, meat, and seafood.
  • Lamb Weston Holdings Inc.: See company description above.
  • Dollar Tree Inc.: Dollar Tree is an operator of discount variety stores under the Dollar Tree and Family Dollar names. These stores sell merchandise including diapers, batteries, pet food and supplies, and hardware. On Aug. 25, the company announced the appointment of Jeffrey Davis as chief financial officer. Davis previously served in executive roles at Walmart Inc. (WMT), J.C. Penney Co. Inc., and other retailers. He succeeds Kevin Wampler, who will remain as an advisor through April 2023.

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. For example, during the early stages of the pandemic, shares in toilet paper maker Kimberly-Clark Corporation (KMB) gained 45% as demand for its products skyrocketed.

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.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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