12 Best FMCG Stocks To Buy Now

Published on December 14, 2022 at 11:06 am by Sheryar Siddiq in Hedge Funds, News

In this article, we discuss the 12 best FMCG stocks to buy now. If you want to skip our industry analysis you can see the 5 Best FMCG Stocks To Buy Now.

Fast-moving consumer goods (FMCG), also known as consumer packaged goods (CPG), refer to highly in-demand products that are affordable and thus, sold quickly. Such items are considered “fast-moving” as they are quick to leave the shelves of a store or supermarket because consumers use them regularly. Representing one of the largest industries worldwide, the global FMCG sector has been experiencing consistent healthy growth over the last decade due to the increased adoption of experience retailing, where consumers consider shopping as a social activity. According to a report by AlliedMarketResearch, the global FMCG market is projected to reach $15,361.8 billion by 2025, registering a CAGR of 5.4% from 2018 to 2025.

Regardless of inflation and tough market conditions, people must eat and buy essentials, making FMCG stocks better compared to the other sectors in the stock market. 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 hedge funds as well.

Our Methodology

After carefully analyzing grocery stocks listed on NYSE and NASDAQ, we compiled a list of 12 grocery stocks that would make a valuable addition to an investor portfolio. These stocks have solid financials and they are popular among the 920 elite hedge funds tracked by Insider Monkey as of the end of the third quarter.

Best FMCG Stocks To Buy Now

12. Dollar Tree, Inc. (NASDAQ:DLTR)

Number Of Hedge Fund Holders: 37

Dollar Tree, Inc. (NASDAQ:DLTR) is an American multi-price-point chain of discount variety stores. Headquartered in Chesapeake, Virginia, it operates 15,115 stores throughout the 48 contiguous U.S. states and Canada. Supported by a nationwide logistics network of 24 distribution centers, it mainly attracts “financially disadvantaged” customers.

Earlier this November, Deutsche Bank analyst Krisztina Katai raised the price target on Dollar Tree, Inc. (NASDAQ:DLTR) to $194 from $163 and maintained a Buy rating on the shares. The analyst is “encouraged” by the company’s sales progress in Q3, stating that both the company’s banners posted sales upside, with same-store-sales improving as the quarter progressed, thus generating higher revenue guidance for 2022.

According to Insider Monkey’s third quarter database, 37 hedge funds were bullish on Dollar Tree, Inc. (NASDAQ:DLTR), compared to 38 funds in the earlier quarter. Paul Hilal’s Mantle Ridge LP is the biggest position holder in the company, with 11.3 million shares worth $1.5 billion.

Similar to Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), PepsiCo, Inc. (NASDAQ:PEP), and Colgate-Palmolive Company (NYSE:CL), Dollar Tree, Inc. (NASDAQ:DLTR) is one of the best FMCG stocks to buy now according to elite investors.

Here is what Madison Funds had to say about Dollar Tree, Inc. (NASDAQ:DLTR) in its Q2 2022 investor letter:

“Dollar Tree, Inc. (NASDAQ:DLTR) reported strong results on the heels of rolling out the $1.25 price point initiative at all Dollar Tree stores nationwide. Furthermore, they announced several executive leadership changes, undoubtedly catalyzed by new Executive Chairman Richard Dreiling. We remain encouraged by the progress to date and are excited to see what the new team can do at Dollar Tree over the coming years.”

11. Monster Beverage Corporation (NASDAQ:MNST)

Number Of Hedge Fund Holders: 39

Monster Beverage Corporation (NASDAQ:MNST) is an American beverage company that engages in the development, marketing, sale, and distribution of energy drink beverages and concentrates including Monster Energy, Relentless and Burn. On October 27, Madison Square Garden Sports and Madison Square Garden Entertainment Corporation announced a marketing partnership with Monster Energy Corporation (NASDAQ:MNST), naming it the “Official Energy Drink Partner of the New York Rangers and Madison Square Garden.”

On November 29, Argus analyst John Staszak raised the price target on Monster Beverage Corporation (NASDAQ:MNST) to $118 from $113 and kept a Buy rating on the shares. According to the analyst, MNST shares remain attractive despite investor concerns about rising input costs, adding that the company’s lower earnings in Q3 reflected shortages of aluminum cans and higher transportation costs as he raised his FY23 view by 1c to $3.16.

At the end of the third quarter of 2022, 39 hedge funds in the database of Insider Monkey held stakes worth $1.96 billion in Monster Beverage Corporation (NASDAQ:MNST), compared to 46 in the preceding quarter worth $2.4 billion.

In its Q2 2022 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and Monster Beverage Corporation (NASDAQ:MNST) was one of them. Here is what the fund said:

“Monster Beverage Corporation (NASDAQ:MNST) develops and sells energy drinks and concentrates. The company’s shares outperformed, driven by an impressive earnings report highlighted by better-than-expected organic growth. Management also gave guidance that indicated a potential bottom in gross margins, as well as upcoming price increases that helped give investors confidence in its growth outlook.”

10. Mondelez International, Inc. (NASDAQ:MDLZ)

Number Of Hedge Fund Holders: 52

Mondelez International, Inc. (NASDAQ:MDLZ) is an American multinational confectionery, food, holding and beverage and snack food company based in Chicago. It currently pays a quarterly dividend of $0.39 per share for a dividend yield of 2.3%, as of December 9. The company has been raising its dividends consistently for the past eight years, which makes it one of the best dividend stocks in the FMCG sector.

On November 2, Morgan Stanley analyst Pamela Kaufman raised her price target on Mondelez International, Inc. (NASDAQ:MDLZ) to $69 from $63 and kept an Overweight rating on the shares following the company’s Q3 EPS beat, “strong” organic sales growth and FY22 guidance increase.

At the end of Q3 2022, 52 hedge funds tracked by Insider Monkey owned stakes in Mondelez International, Inc. (NASDAQ:MDLZ), up from 48 in the previous quarter. The collective value of these stakes is over $1.44 billion. Two Sigma Advisors was the company’s leading stakeholder in Q3.

Here is what Coho Partners said about Mondelez International, Inc. (NASDAQ:MDLZ) in its Q3 2022 investor letter:

“Analysts’ bottom-up estimates for both 2022 and 2023 for the S&P 500 Index are beginning to decline. Coho is not immune to the earnings pressure exerted by a strong USD, although the portfolio on the whole has modestly less foreign revenue exposure relative to the S&P 500 Index. The two most impacted Coho stocks includes Mondelez International (NASDAQ:MDLZ), which gets about 75% of its revenues outside the U.S.”

9. Colgate-Palmolive Company (NYSE:CL)

Number Of Hedge Fund Holders: 57

Colgate-Palmolive Company (NYSE:CL) is an American multinational consumer products company headquartered on Park Avenue in Midtown Manhattan, New York City. The company specializes in the production, distribution, and provision of household, health care, personal care, and veterinary products.

Earlier this November, Barclays analyst Lauren Lieberman raised the price target on Colgate-Palmolive Company (NYSE:CL) to $76 from $72 and kept an Equal Weight rating on the shares. According to the analyst, Colgate’s Q3 results did not play out as he had expected and bucked the trend seen across staples this earnings season.

At the end of Q3 2022, 57 hedge funds tracked by Insider Monkey presented a bullish stance on Colgate-Palmolive Company (NYSE:CL), up from 55 a quarter earlier. The collective value of stakes owned by these hedge funds is over $4 billion.

Third Point mentioned Colgate-Palmolive Company (NYSE:CL) in its recently-published Q3 2022 investor letter. Here is what the firm has to say:

“Third Point recently acquired a significant position in Colgate-Palmolive Company (NYSE:CL). The investment fits several important criteria in the current investment environment. First, the business is defensive and has significant pricing power in inflationary conditions. Second, there is meaningful hidden value in the company’s Hill’s Pet Nutrition business, which we believe would command a premium multiple if separated from Colgate’s consumer assets. Third, there is a favorable industry backdrop in consumer health, with new entrants via spin-offs and potential for consolidation. Finally, the current valuation is attractive both because earnings growth is poised to inflect higher, and because shareholders are paying very little for the optionality around Hill’s or Colgate’s ability to participate in further consolidation in the consumer health sector.

Colgate has a strong portfolio of brands and operates across four categories that should perform well across most economic conditions: oral care, home care, personal care, and pet nutrition. Although Colgate has delivered organic sales growth of 5-6% over the past few years, earnings growth has been disappointing, and the stock has become a perennial underperformer. Foreign exchange headwinds have pressured reported results. Business reinvestment, supply chain disruption, and inflationary pressures have weighed heavily on margins; those headwinds are now reversing. Stepped up investments in demand generation, product innovation, and digital capabilities are starting to pay off. Global supply chain bottlenecks are easing and product availability on the shelf is improving. And, most importantly, raw material, transportation, and wage pressures are stabilizing, and even reversing in some areas, at the same time additional pricing takes effect. Taken together, the stage is set for Colgate to deliver several years of outsized earnings growth, as sales continue to increase, foreign exchange movements are annualized, and margins finally recover…” (Click here to view the full text)

8. Dollar General Corporation (NYSE:DG)

Number Of Hedge Fund Holders: 59

Dollar General Corporation (NYSE:DG) is an American chain of variety stores headquartered in Goodlettsville, Tennessee. The largest retailer in the US in terms of store count, it operates over 18 thousand stores in 47 states across the U.S. On December 1, Dollar General Corporation (NYSE:DG) declared a quarterly dividend of $0.55 per share, in line with previous. The dividend is payable on January 17, 2023 to shareholders of record on January 3.

Earlier this November, Deutsche Bank analyst Krisztina Katai raised the price target on Dollar General Corporation (NYSE:DG) to $293 from $265 and maintained a Buy rating on the shares. The analyst tells investors to stick with the “winners” in retail.

According to Insider Monkey’s third quarter database, 59 hedge funds were long Dollar General Corporation (NYSE:DG), compared to 51 funds in the earlier quarter. Andreas Halvorsen’s Viking Global held the biggest position in the company, comprising 2.4 million shares worth $582 million.

Here is what Aristotle Capital specifically said about Dollar General Corporation (NYSE:DG) in its Q2 2022 investor letter:

“Dollar General Corporation (NYSE:DG) contributed to performance in the second quarter following the report of first quarter earnings that were above expectations. Strength in the second quarter was driven by better-than-expected sales of consumable items. Guidance for the remainder of the year was increased. In addition to solid earnings, forecasts for the increasing expectations of a recession drove positive sentiment towards consumer discretionary companies with more predictable revenue like dollar stores.”

7. The Coca-Cola Company (NYSE:KO)

Number Of Hedge Fund Holders: 59

The Coca-Cola Company (NYSE:KO) is one of America’s leading beverage companies. It specializes in a wide range of beverages, syrups, and non-alcoholic drinks. The company is best known as the producer of Coca-Cola.

One of the best FMCG stocks that also pays dividends, The Coca-Cola Company (NYSE:KO) holds a 60-year track of consistent dividend growth. It currently offers a per-share dividend of $0.44 per share for a dividend yield of 2.79%, as of December 9.

According to the third quarter database of Insider Monkey, 59 hedge funds were bullish on The Coca-Cola Company (NYSE:KO), compared to 60 funds in the earlier quarter. Warren Buffett’s Berkshire Hathaway is the largest stakeholder of the company, with 400 million shares worth $22.40 billion.

Carillon Tower Advisers made the following comment about The Coca-Cola Company (NYSE:KO) in its Q3 2022 investor letter:

“Shares of The Coca-Cola Company (NYSE:KO) sold off with consumer staples even as the company reported strong pricing for the second quarter. On average, product prices rose with management hinting at further momentum.”

6. Philip Morris International Inc. (NYSE:PM)

Number Of Hedge Fund Holders: 63

Philip Morris International Inc. (NYSE:PM) is an international tobacco company based in the United States that makes and distributes cigarettes and other tobacco-related products. Often referred to as one of the companies comprising Big Tobacco, its most recognized and best selling product is Marlboro.

On November 15, Argus analyst David Coleman upgraded Philip Morris International Inc. (NYSE:PM) to Buy from Hold with a $110 price target, stating that the company is phasing out cigarettes and replacing them with higher-margin alternatives such as HTP with plans to become smoke-free by 2025. He adds that the company’s management has also raised its dividend, which signals greater confidence in its outlook.

As per Insider Monkey’s database, 63 hedge funds had stakes in Philip Morris International Inc. (NYSE:PM) at the end of the third quarter. GQG Partners remained the leading stakeholder in the company at the end of Q3 2022.

Much like Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), PepsiCo, Inc. (NASDAQ:PEP), and Colgate-Palmolive Company (NYSE:CL), Philip Morris International Inc. (NYSE:PM) is a leading FMCG stock.

Here is what Coho Relative Value Equity Fund has to say about Philip Morris International Inc. (NYSE:PM) in its Q3 2022 investor letter:

Coho is not immune to the earnings pressure exerted by a strong USD, although the portfolio on the whole has modestly less foreign revenue exposure relative to the S&P 500 Index. The two most impacted Coho stocks includes Philip Morris International, which essentially derives all of its revenues outside the U.S. Harkening back to Table 1, the decline in Philip Morris earnings for 2022 versus the reported earnings in 2021 is entirely related to the strengthening dollar. On a constant currency basis, Philip Morris’ earnings in 2022 would be up mid to high single digits.

Click to continue reading and see 5 Best FMCG Stocks To Buy Now.