In this article, we will take a look at the 11 best consumer stocks to buy now. You can skip our detailed analysis of the consumer industry’s outlook for 2022, and go directly to the 5 Best Consumer Stocks to Buy Now.
Consumer staples are the essential items that people purchase to sustain their daily life. Companies in the consumer staples sector produce, market, and sell goods like foods, beverages, tobacco, household products, and personal care items. Given their nature, consumer stocks are seen as non-cyclical and thus many consumer staple products are in demand throughout the year, regardless of how well or poorly the economy is doing.
Due to their steady ability to generate profits, consumer staples stocks frequently give investors recurring dividends. Because of this, retirees and other investors seeking stable long-term income and returns frequently favor consumer staples companies.
Given the economic uncertainty with the Federal Reserve’s interest rate increases, the markets have been volatile and stocks could continue to decline if economic data doesn’t meet expectations. Given the uncertainties, it can be a good idea for investors to have a diversified portfolio across different stocks and sectors. In the consumer staples sector, here are some leading stocks that are also held by many hedge funds in our database.
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Our Methodology:
In order to identify the best consumer stocks to buy now, we are going to use the collective wisdom of nearly 900 hedge funds tracked by Insider Monkey. We took the stocks listed in the iShares Global Consumer Staples ETF, whose objective is to track the performance of an index composed of global equities in the consumer staples sector, and we ranked them based on the number of hedge funds in our database that held shares at the end of Q2 2022 in the same stock.
Best Consumer Stocks To Buy Now
11. The Estée Lauder Companies Inc. (NYSE:EL)
Number of Hedge Fund Holders: 46
% Weight of iShares Global Consumer Staples ETF as of September 22: 1.59
The Estée Lauder Companies Inc. (NYSE:EL) is one of the top producers and marketers of high-quality hair care, cosmetics, fragrance, and skin care products. The business has customers in over 150 countries. As of September 22, the stock accounted for 1.59% of the iShares Global Consumer Staples ETF’s holdings.
In the fourth fiscal quarter, The Estée Lauder Companies Inc. (NYSE:EL) reported a normalized EPS of $0.42, beating estimates by $0.06. The company’s revenue in the fourth quarter came in at $3.56 billion and beat revenue estimates by $80 million.
On September 20, Goldman Sachs analyst Jason English upgraded The Estée Lauder Companies Inc. (NYSE:EL) stock from Neutral to Buy rating and increased his price target to $303 from $298.
As of Q2 2022, 46 hedge funds tracked by Insider Monkey have positions in The Estée Lauder Companies Inc. (NYSE:EL), worth $2.9 billion. With 5.9 million shares, worth $1.5 billion, Fundsmith LLP is the company’s largest shareholder.
Alongside PepsiCo, Inc. (NASDAQ:PEP), Walmart Inc. (NYSE:WMT), and The Procter & Gamble Company (NYSE:PG), The Estée Lauder Companies Inc. (NYSE:EL) is a consumer staple that’s held by many hedge funds in our database at the end of Q2 2022.
10. Mondelez International, Inc. (NASDAQ:MDLZ)
Number of Hedge Fund Holders: 48
% Weight of iShares Global Consumer Staples ETF as of September 22: 2.39
Mondelez International, Inc. (NASDAQ:MDLZ), based in Chicago, is a food and beverage company. The product line of the company includes snacks such as cookies, crackers, chocolate, gum, and candies, as well as cheese and grocery items. It runs a network of production plants across Asia, the Middle East and Africa (AMEA), Latin America, North America, and Europe.
Given its scale, Mondelez International, Inc. (NASDAQ:MDLZ) has higher margins than many of its competitors and the company also had strong Q2 results with normalized EPS of $0.67, beating analyst estimates by $0.03. Its revenue for the quarter came in at $7.27 billion, which showed an 9.5% growth from the same period last year. In the form of cash dividends and share repurchases, the company returned $1.2 billion to shareholders.
On July 28, Mondelez International, Inc. (NASDAQ:MDLZ) declared a 10% hike in its quarterly dividend to $0.385 per share. This marked the company’s 10th consecutive year of dividend growth. As of September 25, the stock has a yield of 2.61%.
Overall, the company remained a popular stock among hedge funds. At the end of the second quarter of 2022, 48 hedge funds in the database of Insider Monkey held stakes worth $1.8 billion in Mondelez International, Inc. (NASDAQ:MDLZ). As of September 20, Two Sigma Advisors owned more than 4 million shares in in Mondelez International, Inc. (NASDAQ:MDLZ). The hedge fund’s total stake in the company stood at over $279 million, which accounted for 0.79% of its 13F portfolio.
9. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 48
% Weight of iShares Global Consumer Staples ETF as of September 22 2.27
Altria Group, Inc. (NYSE:MO) produces and sells cigarettes, wine, and other tobacco products. As of September 22, the stock accounted for 2.27% of iShares Global Consumer Staples ETF’s holdings.
In August, Altria Group, Inc. (NYSE:MO) raised its quarterly dividend to $0.94 per share, a 4% hike from its previous dividend of $0.90 per share. This was the company’s 12th consecutive year of dividend growth. The company’s shares yield at 9.02%, as of September 25.
As of Q2 2022, 48 hedge funds tracked by Insider Monkey have positions in Altria Group, Inc. (NYSE:MO), worth $1.8 billion. With over 8.8 million shares, worth $370 million, Arrowstreet Capital is the company’s largest shareholder.
8. The Kroger Co. (NYSE:KR)
Number of Hedge Fund Holders: 49
% Weight of iShares Global Consumer Staples ETF as of September 22: 0.86
The Kroger Co. (NYSE:KR) is a retail company. The business runs multi-department stores, marketplace stores, food and medicine stores, and pricing impact warehouses. Under several brand names, it operates 2,726 supermarkets in 35 states and the District of Columbia.
Given that it’s one of the leaders in the retail sector, The Kroger Co. (NYSE:KR) has both economies of scale and earnings power. In the second fiscal quarter, The Kroger Co. (NYSE:KR) reported a normalized EPS of $0.90, beating analyst estimates by $0.07. The company’s revenue in the second quarter came in at $34.64 billion, an increase of 9.3% year over year.
On September 9, Deutsche Bank analyst Krisztina Katai kept a Hold rating on The Kroger Co. (NYSE:KR) stock and raised her price target to $54 from $53.
When looking at the institutional investors followed by Insider Monkey at the end of Q2, Berkshire Hathaway managed by Warren Buffett, holds the biggest position in The Kroger Co. (NYSE:KR). Berkshire Hathaway has over $2 billion position in the stock, comprising 0.82% of its 13F portfolio.
7. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 55
% Weight of iShares Global Consumer Staples ETF as of September 22: 1.84
Colgate-Palmolive Company (NYSE:CL), headquartered in Manhattan, New York City, is a consumer products company.
Given its scale, Colgate-Palmolive Company (NYSE:CL) also enjoys higher margins than many of its rivals. In Q2 2022, Colgate-Palmolive Company (NYSE:CL) reported a normalized EPS of $0.72, beating the consensus by $0.01. The company’s revenue in the second quarter came in at $4.48 billion, surpassing revenue estimates by $130 million.
In August, Barclays raised its price target to $71 on Colgate-Palmolive Company (NYSE:CL), with an ‘Equal Weight’ rating on the shares.
As of September 2022, the company also has a quarterly dividend of $0.47 per share with a dividend yield of 2.49%.
55 hedge funds in Insider Monkey’s database held shares in Colgate-Palmolive Company (NYSE:CL) at the end of the second quarter of 2022. These hedge funds had a total collective position in the firm worth about $2.9 billion. First Eagle Investment Management, with a position worth $899 million, stood as the most significant shareholder of Colgate-Palmolive Company (NYSE:CL).
First Eagle Investments mentioned Colgate-Palmolive Company (NYSE:CL) in its Q2 2022 investor letter. Here is what the firm has to say:
Shares of consumer staples giant Colgate-Palmolive have performed well as investors rotated into more recessionary-resilient defensive stocks amid the broader selloff during the second quarter. The company raised revenue guidance for 2022 but lowered its margin outlook because of higher costs for raw materials, packaging and logistics; we believe that the company’s size and market share provide it with options to mitigate the inflation challenges it faces. We continue to like Colgate- Palmolive’s dividend and previously announced $5 billion stock buyback program.
6. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 56
% Weight of iShares Global Consumer Staples ETF as of September 22: 4.33
Philip Morris International Inc. (NYSE:PM) is an American tobacco company. It sells its goods in more than 180 nations. Marlboro is the company’s best-known and best-selling product.
In the second fiscal quarter, Philip Morris International Inc. (NYSE:PM) reported normalized EPS of $1.48 and revenue of $7.83 billion, beating estimates by $0.23 and $1.07 billion respectively.
In September, Philip Morris International Inc. (NYSE:PM) also hiked its quarterly dividend to $1.27 per share, from $1.25 per share. With this increase, the company has increased its dividend for 13 straight years.
As of Q2 2022, 56 of the 895 hedge funds tracked by Insider Monkey were long Philip Morris International Inc. (NYSE:PM) shares, for a total value of $6.8 billion. Rajiv Jain’s GQG Partners was its largest shareholder with ownership of over 30 million shares valued at $3 billion.
First Eagle Investments mentioned Philip Morris International Inc. (NYSE:PM) in its Q2 2022 investor letter. Here is what the firm has to say:
Philip Morris shares benefited from the market rotation into defensive areas of the market. The company continued to make progress in its transition to next-generation, non-combustible products and during the quarter entered into an agreement to acquire Swedish Match, which is a Stockholm-based maker of Zyn oral nicotine pouches.
Like Philip Morris International Inc. (NYSE:PM), PepsiCo, Inc. (NASDAQ:PEP), Walmart Inc. (NYSE:WMT), and The Procter & Gamble Company (NYSE:PG) are consumer stocks held by many hedge funds in our database at the end of Q2 2022.
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Disclosure. None. 10 Best Consumer Stocks to Buy Now is originally published on Insider Monkey.
