e.l.f. Beauty Inc., New Oriental Education & Technology Group Inc., and Hims & Hers Health Inc. are among the top-performing consumer staples stocks this month, each providing investors with returns in excess of 180% in the past year.
Inflation and rising interest rates have weighed heavier on consumer staples stocks than on the broader market in the past year. The Consumer Staples Select Sector SPDR ETF (XLP) has risen by 3% in the past 12 months, compared to the Russell 1000 index's 5% gain over the same period.
Below we look at the top consumer staples stocks in three categories: the best value, the fastest growth, and the most momentum. All data are as of May 8.
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 (S)||Market Capitalization (Market Cap) ($B)||12-Month Trailing P/E Ratio|
|Marfrig Global Foods S.A. (MRRTY)||1.40||0.9||1.1|
|JBS S.A. (JBSAY)||7.31||8.1||2.7|
|Cal-Maine Foods Inc (CALM)||50.42||2.5||3.2|
- 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, as well as ready-to-eat products like frozen vegetables. Marfrig’s shares are down 8% so far this year, owing to lower average sales price for its beef, combined with lower gross margins due to higher cattle purchase prices in its North American market.
- JBS S.A.: JBS is a food processing company in Brazil that offers animal products such as pork, beef, poultry, and fish. Like Marfrig, JBS is also experiencing a sharp reduction in demand and higher livestock purchase prices, which led the company's net income to drop 64% year-over-year in the final quarter of 2022. JBS's extremely low P/E multiple is currently reflecting the heightened risks (and possibly higher reward if you’re a value investor) associated with this stock.
- Cal-Maine Foods: Cal-Maine handles the production, packaging, marketing, and distribution of shell eggs for supermarkets, distributors, and consumers all across the United States. Cal-Maine’s bottom line increased eightfold for the quarter ending Feb. 25 after a bird flu outbreak killed 43 million egg-laying hens, causing U.S. egg prices to double.
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 1,000% were excluded as outliers.
|Fastest Growing Consumer Staples Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Cal-Maine Foods Inc (CALM)||50.42||2.5||717||109|
|Performance Food Group Co. (PFGC)||62.01||9.7||820||8|
|Hims & Hers Health Inc. (HIMS)||12.04||2.5||N/A (See company description)||88|
- Cal-Maine Foods Inc.: See company description above.
- Performance Food Group Co.: Performance Food Group is a food distribution company that serves restaurants, convenience stores, and hospitals with a wide range of frozen food, snacks, and beverages.
- Hims & Hers Health Inc.: Hims & Hers is a health and wellness company that operates an integrated Telehealth platform, medical record system, and online pharmacy. The company's net loss shrank by 39% in the first quarter, while subscriber count and total revenue both nearly doubled from the prior-year quarter. Note Hims & Hers Health doesn't have an EPS growth figure in the table above because the company reported negative EPS in the most recent quarter.
Consumer Staples Stocks With the Most Momentum
These are the consumer staples stocks that had the highest total return over the past 12 months.
|Consumer Staples Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|e.l.f. Beauty Inc. (ELF)||88.39||4.7||279|
|New Oriental Education & Technology Group Inc (EDU)||41.32||7.0||230|
|Hims & Hers Health Inc. (HIMS)||12.04||2.5||187|
|Russell 1000 Index||N/A||N/A||3|
|Consumer Staples Select Sector SPDR ETF (XLP)||N/A||N/A||1|
- e.l.f. Beauty Inc.: Formerly known as J.A. Cosmetics Holdings, e.l.f. is a global cosmetic and skin care product manufacturer that markets its products globally under the e.l.f. cosmetic, e.l.f. skin, Well People, and Keys Soulcare brands. Net sales increased 49% year over year to $147 million in the last three months of 2022, while EBITDA grew 69% during the same period. In February, the company raised its full-year sales forecast to $541 million from $478 million.
- New Oriental Education & Technology Group Inc.: New Education is one of the largest private tutors in China with 712 learning centers and 26,000 teachers. The company swung to a profit in the most recent quarter, reporting net income of $94 million after losing $126 million a year ago. The company has seen consistent growth in the livestream e-commerce business it launched in 2021 amid a regulatory crackdown on China's private education sector.
- Hims & Hers Health Inc.: See company description above.
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, 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 for 25 consecutive years. The XLP ETF yields 2.42%, considerably above the S&P 500's 1.57% dividend yield.
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
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.
JBS S.A. “4Q22 and 2022 Earnings Release.” Page 9.
Cal-Maine Foods Inc. “Cal-Maine Reports Results for Third Quarter Fiscal 2023.”
Hims & Hers Health Inc. "Hims & Hers Health Inc. Reports First Quarter 2023 Financial Results and Raises Full Year 2023 Outlook."
e.l.f Beauty Inc. “e.l.f. Beauty Announces Third Quarter Fiscal 2023 Results.”
New Oriental Education & Technology Group Inc. "New Oriental Announces Results for the Third Fiscal Quarter Ended February 28, 2023."
Yahoo! Finance. "Consumer Staples Select Sector SPDR Fund (XLP)."
YCharts. "S&P 500 Dividend Yield."