In this article, we discuss the 10 best FMCG stocks to buy now. If you want to skip our detailed analysis of the FMCG sector, go directly to the 5 Best FMCG Stocks To Buy Now.
Fast moving consumer goods (FMCG) are consumer-oriented products that are used on a daily basis, are highly demanded, and usually have a short shelf life, for example, food, bakery items, beverages, nicotine products, hygiene products, and other consumables. The United States is one of the largest markets for FMCG, with dedicated market research, product innovation, new market entrants, unique branding, and skilled workers in the FMCG sector.
According to Allied Market Research, the global FMCG market is projected to reach $15,361.8 billion by 2025, with a CAGR of 5.4% from 2018 to 2025. Due to the COVID-19 pandemic, rise in ecommerce, and digital innovation, many companies have had to change the way they reach out to consumers, market their products, and the distribution channels they use.
In-store retail sales went down sharply due to the recent pandemic driven lockdowns, but demand for FMCG companies was stable since ecommerce giants like Amazon.com, Inc. (NASDAQ:AMZN), Alibaba Group Holding Limited (NYSE:BABA), Walmart Inc. (NYSE:WMT), and eBay Inc. (NASDAQ:EBAY) stepped in to ensure that global supply chain disruption and lockdowns did not affect consumers directly by depriving them of basic everyday necessities, and set out to deliver FMCG and consumer staple products to customers via extensive delivery systems.
The most notable FMCG stocks include Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), PepsiCo, Inc. (NASDAQ:PEP), and Colgate-Palmolive Company (NYSE:CL), among others discussed in detail below. These stocks are highly sought after by the hedge funds as well.
Our Methodology
To create the list of the 10 best FMCG stocks to buy now, we selected stocks that had positive ratings, strong growth catalysts, and were popular among the hedge funds.
Best FMCG Stocks To Buy Now
10. Molson Coors Beverage Company (NYSE:TAP)
Number of Hedge Fund Holders: 39
Molson Coors Beverage Company (NYSE:TAP) is a renowned multinational drink and beverage company which was formed after Molson from Canada and Coors from the USA merged in 2005.
Molson Coors Beverage Company (NYSE:TAP) is known for its famous beer brands including Coors Light, Blue Moon, Miller Lite, and Pilsner Urquell, among others.
Molson Coors Beverage Company (NYSE:TAP) is now delving into premium brands, introducing new beverages, and its partnership with The Coca-Cola Company (NYSE:KO) since September 2020 allows the company to grow and maintain profitability.
On October 28, Molson Coors Beverage Company (NYSE:TAP)’s Q3 EPS came in at $1.75, beating estimates by $0.24. The company also announced a quarterly cash dividend of CAD 0.34 per share, payable on December 15 to shareholders on record as of December 3.
At the end of the second quarter, 39 hedge funds tracked by Insider Monkey reported owning stakes in Molson Coors Beverage Company (NYSE:TAP), worth $519.3 million. This is compared to 34 hedge funds in the preceding quarter, with an approximate stake value of $341 million.
Here is what Argosy Investors has to say about Molson Coors Beverage Company (NYSE:TAP) in its Q2 2021 investor letter:
“TAP (+52% from August 2020 purchase to sale) was never intended to be a core position. I expected a couple of years of deleveraging and perhaps some excitement around the hard seltzer category, but the stock price increased faster than I expected. I have not fully exited these positions as I rarely do all in one trade, but hopefully this gives some perspective into my thinking on selling so quickly.”
9. Monster Beverage Corporation (NASDAQ:MNST)
Number of Hedge Fund Holders: 46
Monster Beverage Corporation (NASDAQ:MNST) is an American beverage company known for its energy drinks such as Monster Energy, Burn, Relentless. Formerly, Monster Beverage Corporation (NASDAQ:MNST) was named Hansen Natural Corporation, and its core products were juices and sodas. In 2012, the company rebranded itself as Monster Beverage Corporation (NASDAQ:MNST) and sold its non-energy drinks segment to The Coca-Cola Company (NYSE:KO), who now owns 19.4% of the energy drink corporation.
Monster Beverage Corporation (NASDAQ:MNST) is one of the best FMCG stocks that has performed consistently over the last 30 years, according to Ben Howard from Alpha Squared Capital on October 7. He believes that Monster Beverage Corporation (NASDAQ:MNST) is capable of future growth if the company invests in consistent product development, sales and marketing efforts, and a strong capital deployment strategy. The analyst suggests that the current valuation of Monster Beverage Corporation (NASDAQ:MNST) can be a good entry point for long-term investors.
Monster Beverage Corporation (NASDAQ:MNST) reported on November 4 its Q3 results. EPS in the period totaled $0.63, missing targets by -$0.04. Revenue for the quarter exceeded estimates by $15.83 million, coming in at $1.41 billion.
Deutsche Bank analyst Steve Powers kept a Buy rating on Monster Beverage Corporation (NASDAQ:MNST) on November 2, but lowered the price target from $108 to $105, citing the global supply chain disruptions and inflation cutting into margins.
Of the 873 hedge funds tracked by Insider Monkey as of June this year, 46 hedge funds were bullish on Monster Beverage Corporation (NASDAQ:MNST), up from 45 in the previous quarter.
In addition to Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), PepsiCo, Inc. (NASDAQ:PEP), and Colgate-Palmolive Company (NYSE:CL), Monster Beverage Corporation (NASDAQ:MNST) is a top FMCG stock.
8. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 46
Philip Morris International Inc. (NYSE:PM) is a Swiss-American multinational tobacco manufacturing company that is recognized for its flagship cigarette brands like Marlboro, Benson & Hedges, Lark, and Bond Street, among others. Philip Morris International Inc. (NYSE:PM) is one of the Big Tobacco companies that serves customers in over 180 countries.
Philip Morris International Inc. (NYSE:PM), one of the best FMCG stocks, was awarded an ‘A’ rating by Fitch Ratings on November 4. Fitch Ratings took into account Philip Morris International Inc. (NYSE:PM)’s leading market share, brand identity, product quality, and worldwide availability, as well as the company’s commitment to financial policies during the rating process. According to Fitch, the outlook for the tobacco giant is stable.
On October 19, Q3 earnings were reported by Philip Morris International Inc. (NYSE:PM). EPS for the period totaled $1.58, beating estimates by $0.02. Revenue for the quarter came in at $8.12 billion, surpassing estimated revenue by $175.15 million.
As of June this year, 46 hedge funds were long Philip Morris International Inc. (NYSE:PM).
Here is what Broyhill Asset Management has to say about Philip Morris International Inc. (NYSE:PM) in its Q2 2021 investor letter:
“Philip Morris (PM) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 23%. We shared our thoughts on these regulations during the quarter, which are available here.
‘PM Valuation. PM is up ~ 15% YTD and would have the most to gain under a nicotine cap. A cap would likely accelerate conversion to iQOS, which is 100% incremental for PM (PM also has zero exposure to combustible cigarettes in the U.S. and licenses its IQOS product for MO to distribute domestically). As such, the decline in PM was much more muted, with the stock hitting new 52 week highs a day after the Biden headline, driven by yesterday’s earnings release. It didn’t take long for investors to shift their attention back to fundamentals and the fundamentals here are best in class. In short, results beat estimates across the board (a recurring theme here), and management raised guidance for the full year (another recurring theme). IQOS continued to deliver impressive growth, recording continued market share gains on the heels of continued user acquisition growth, up 1.5M to 19.1M total users. Importantly, IQOS now represents nearly 30% of PM net revenues (management expects “smoke-free” products to represent more than half of their business by 2025, which should make the ESG folks happy), which is driving top-line growth and margin expansion. Hard to believe that they have created a product with higher margins than combustible cigarettes!! We expect PM operating margins to increase by 100bps – 200bps annually as IQOS continues to gain share. The stock trades at ~ 15x today or 2/3 of the market’s multiple for a business likely to generate $35B in cash flow – or 25% of the market cap – in just the next three years. Over the last decade, shares have traded at an average multiple of 18x and within a range of ~ 14x – 22x (+/-1 standard deviation). The stock yields 5.1% at the current price, and we expect management to resume share purchases in the back half of this year.’”
7. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 47
Altria Group, Inc. (NYSE:MO) is one of the leading American corporations engaged in manufacturing tobacco and nicotine products. Altria Group, Inc. (NYSE:MO) is the parent company of Philip Morris USA, US Smokeless Tobacco Co., John Middleton, Helix Innovations, and Philip Morris Capital Corporation. In addition to that, Altria Group, Inc. (NYSE:MO) owns a 10% stake in Anheuser-Busch InBev SA/NV (NYSE:BUD), as well as other investments in the cannabis and e-cigarettes markets.
Altria Group, Inc. (NYSE:MO) announced Q3 earnings on October 28. EPS for the quarter came in at $1.22, missing estimates by -$0.04.
According to Altria Group, Inc. (NYSE:MO), 20 million US adults are actively looking for less harmful alternatives to cigarettes, and the company plans to tap that market actively by creating a smoke-free culture for adults by 2030. The global smokeless tobacco market is positioned to grow at a CAGR of 4.7% during the forecast period of 2019 to 2024.
As of the second quarter of 2021, 47 hedge funds in the database of Insider Monkey were long Altria Group, Inc. (NYSE:MO), up from 38 in the first quarter.
Here is what Broyhill Asset Management has to say about Altria Group, Inc. (NYSE:MO) in its Q2 2021 investor letter:
“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.
MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”
6. Mondelez International, Inc. (NASDAQ:MDLZ)
Number of Hedge Fund Holders: 53
Mondelez International, Inc. (NASDAQ:MDLZ) is a multinational Chicago-based confectionary, food, and beverage company that is recognized for its multiple signature brands including Oreo, Chips Ahoy!, Sour Patch Kids, Cadbury, Ritz, Trident, and Peek Freans, among others.
On November 2, Mondelez International, Inc. (NASDAQ:MDLZ) reported its Q3 earnings results. EPS for the third quarter totaled $0.71, beating estimates by $0.01. Similarly, revenue for the period equaled $7.18 billion, exceeding estimates by $126.07 million.
Ecommerce sales for Mondelez International, Inc. (NASDAQ:MDLZ) have increased by 30% in Asia, the Middle East, and Africa so far in 2021. In the Chinese market, partnerships with TikTok and Alibaba Group Holding Limited (NYSE:BABA) have helped customers access Mondelez International, Inc. (NASDAQ:MDLZ)’s products conveniently, resulting in 20% of the total sales from ecommerce channels.
Mondelez International, Inc. (NASDAQ:MDLZ) aims to achieve net zero emissions by 2050, and updated its 2021 guidance to include net revenue growth of 4.5%, high single digit EPS, and free cash flow of more than $3 billion. The net income outlook is steady despite the supply chain bottlenecks and labor shortages.
As of June 2021, 53 hedge funds tracked by Insider Monkey were bullish on Mondelez International, Inc. (NASDAQ: MDLZ), up from 45 in the previous quarter.
In addition to Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), PepsiCo, Inc. (NASDAQ:PEP), and Colgate-Palmolive Company (NYSE:CL), Mondelez International, Inc. (NASDAQ: MDLZ) is a top FMCG stock.
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Disclosure: None. 10 Best FMCG Stocks To Buy Now is originally published on Insider Monkey.
