In this article, we will look at the 12 Best FMCG Stocks To Buy According to Hedge Funds.
Consumer Staples Outlook For 2025
Consumer staples refer to essential daily-use products such as packaged food, toothpaste, and dish detergent. These products often run out quickly off the supermarket shelves and are considered “defensive” because consumers continue to purchase these necessities even during economic downturns. Moreover, consumer staple companies are mostly mature dividend payers.
On December 10, 2024, Ben Shuleva, Fidelity Sector Portfolio Manager shared his outlook for the sector in a report published on Fidelity Investments. The consumer staples sector had a positive year but lagged behind the broader market due to investors favoring higher-growth stocks. The high interest rates and concerns about GLP-1 weight-loss drugs affecting food consumption also impacted performance negatively. However, despite these challenges, the sector still posted strong absolute gains. Compared to the S&P 500 index the consumer staple sector gained 16.7% on a year-to-date basis as of December 9, whereas the S&P 500 index gained 26.9% during the same time.
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Ben Shuleva from Fidelity Investments anticipates a return to normalcy for the consumer staples sector in 2025. He suggests this based on a broadly stable economic environment with healthy employment and steady real wage growth. In addition, the Fed is expected to begin cutting interest rates, which could boost dividend-paying stocks. Lastly, consumer spending has remained strong and is expected to remain resilient in 2025, thereby indicating positive sales growth for the sector. Shuleva anticipates that these factors will lead the sector to outperform the broader market in 2025. However, there could be a few uncertainties that could hamper the growth trajectory. The new presidential administration may introduce changes in tariff policies, which could affect certain consumer staples products. Although most consumer staples are manufactured domestically, so the direct impact of tariffs might be limited. Moreover, a strengthening US dollar can negatively affect consumer staples companies with international operations by reducing their foreign earnings when converted back into dollars. Shuleva emphasizes focusing on core fundamentals when investing in consumer staple companies, such as those operating in favorable market structures and maintaining strong underlying growth profiles.
With that, let’s take a look at the 12 best FMCG stocks to buy according to hedge funds.
Image by Squirrel_photos from Pixabay
Our Methodology
To complete the list of the 12 best FMCG stocks to buy according to hedge funds, we used the Consumer Staples Select Sector SPDR Fund and Vanguard Consumer Staples ETF. We selected pure-play Fast-Moving Consumer Goods-producing companies from the holdings of these two ETFs and ranked them in ascending order of the number of hedge funds that held stakes in them at the close of the third quarter. The number of hedge funds was sourced from Insider Monkey’s third-quarter 2024 database.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
12 Best FMCG Stocks To Buy According to Hedge Funds
12. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 32
Altria Group, Inc. (NYSE:MO) is a tobacco company based in Virginia. The company produces a range of products related to tobacco and nicotine. It runs famous cigarette brands including Marlboro and Parliament, and has also started producing smoke-free alternatives to align with the dropping smoking rates around the world. During the fiscal fourth quarter of 2024, the company announced that its US smoke-free volumes have increased by 2.6% from its 2022 base volume of 800 units. Management aims to grow the volumes by at least 35% by 2028.
On January 31, Matthew Smith an analyst at Matthew Smith reiterated a Buy rating on the stock, while maintaining the price target of $60. Altria Group, Inc. (NYSE:MO) surpassed analysts’ expectations with its recent fiscal fourth quarter results for 2024. The company delivered revenue of $5.11 billion up 1.63% year-over-year, beating expectations by $59.6 million. Management attributed this growth to a strong performance from its leading brands and also noted margin expansions within its core tobacco business. Altria Group, Inc. (NYSE:MO) is one of the best FMCG stocks to buy according to hedge funds.
Ashva Capital stated the following regarding Altria Group, Inc. (NYSE:MO) in its Q3 2024 investor letter:
“At Ashva Capital, our focus on intrinsic value–rather than market sentiment or temporary price metrics– sets our portfolio apart from peers. For example, we hold Altria Group, Inc. (NYSE:MO), which has demonstrated resilience and strong performance within our portfolio, particularly following a robust Q3 earnings report. Altria’s results highlighted increased demand for smokeless products, underscoring both the adaptability of its business model and its long-term growth potential—a key factor in our investment decision.
This approach to intrinsic value echoes insights from renowned value investor Bill Miller, whose strategy emphasized fundamental value over market-driven factors. Key principles from Miller’s approach that inform our strategy include:..” (Click here to read the full text)
11. Monster Beverage Corporation (NASDAQ:MNST)
Number of Hedge Fund Holders: 35
Monster Beverage Corporation (NASDAQ:MNST) is a renowned name in the global beverage industry. It is known for its energy drink brands including Monster Energy, Burn, and Relentless. The company also has a significant presence in the alcohol sector since its acquisition of CANarchy Craft Brewery Collective in 2022. One of the strategic edges of the company lies in its partnership with Coca-Cola, this partnership gives the company access to Coca-Cola’s global distribution network.
On January 23, Robert Ottenstein, an analyst at Evercore ISI maintained a Buy rating on the stock and maintained the price target of $60. During the fiscal third quarter of 2024, Monster Beverage Corporation (NASDAQ:MNST) reported energy drinks sector growth in most regions, with challenges across a few. The company noted the energy drinks category is growing at approximately 11.1% year-over-year on an FX-neutral basis in the EMEA and 13.6% growth in the APAC region. Moreover, Latin America remained the strongest contender with 21.1% year-over-year growth. However, on the other hand, the United States experienced slower growth rates compared to previous years.
The company achieved gross margins of 53.7% as a percentage of net sales, excluding Alcohol Brands inventory reserves. Management attributed growth in profit margins to reduced raw material cost and price adjustment strategies. It is one of the best FMCG stocks to buy according to hedge funds.