Consumer staples stocks have frequently outperformed the market, but investors who want to stay ahead of the curve can benefit significantly from being highly selective, according to Barron's.
As this sector encounters headwinds in the form of rising interest rates and inflation, investors can find opportunities with companies like The Coca-Cola Co. (KO), PepsiCo, Inc. (PEP), Altria Group Inc. (MO), Constellation Brands Inc. (STZ), CVS Health Corp. (CVS), Walgreens Boots Alliance Inc. (WBA) and Wal-Mart Stores Inc. (WMT), Barron's reported. (For more, see also: Why These Safe Haven Stocks Aren't Safe.)
'Strong Buy' Ratings
Joseph Agnese, who analyzes consumer stocks for CFRA, provided a "strong buy" rating for several of these stocks, including PepsiCo, Coca-Cola, Wal-Mart, Altria Group Inc. and Constellation Brands, according to Barron's. He emphasized that all of these stocks "provide a dividend to help support total shareholder return, which may be attractive to fixed-income investors seeking greater risk."
PepsiCo and Coca-Cola have enjoyed modest gains over the past year, rising roughly 16% and 14.5%, Google Finance data shows. Of all the stocks that Agnese listed as a "strong buy," Wal-Mart had the strongest performance, rising close to 60% in the last year. Constellation was the runner-up, generating a more than 46% return in that time.
Trouble In Paradise
Altria, however, has not enjoyed positive returns, losing more than 1% in the last year, according to additional figures from Google Finance. Shares of Walgreens are also in the red, having fallen 7% over the last year.
CVS stock has also been coping with lackluster performance, as its shares have risen a meager 0.9% in the last year. Currently, the company is making an effort to purchase major health insurance company Aetna Inc. (AET), a move that could prevent the business from paying dividends in the near-term as it pays off the debt needed to fund the acquisition, according to Barron's. (For more, see also: Make Money With The Consumer Cyclical And Staple Indicator.)