In this article, we will take a look at the 14 Best FMCG Stocks To Buy Now.
If you walk into a modern pantry, you’re almost guaranteed to find it well-stocked with everyday essentials like toilet paper, soap and toothpaste, beverages, and food. This reflects a simple reality: most consumers prefer to keep these items in ample supply. While consumers will always demand these products, they are not entirely indifferent to price increases during inflation. Instead, they might look to save money by buying in bulk or shopping at big-box stores. Regardless, they will continue to prioritize purchasing these necessities.
Known as fast-moving consumer goods (FMCG) or consumer packaged goods (CPG), these high-demand products are valued for their affordability and rapid turnover. They are considered “fast-moving” because they quickly sell off store shelves due to their regular use by consumers. Although investors typically look towards bonds and cash to manage risk, FMCG stocks offer a defensive alternative that can provide both growth and income. While these stocks may not generate spectacular growth opportunities and can lose value as interest rates rise, they generally decline less than other sectors during recessions. In fact, certain industries, such as food, tobacco, and alcohol, may even experience increased demand during economic downturns. As one of the world’s largest industries, the global FMCG sector has seen steady growth over the past decade, driven by the trend of experiential retailing, where shopping is viewed as a social activity. The global FMCG market is projected to reach $18,939.4 billion by 2031, with a compound annual growth rate (CAGR) of 5.1% from 2022 to 2031.
Following low deal volume and value in 2020, the consumer goods landscape saw a significant shift in M&A activity. In 2021, as sizable assets in the sector became scarce and prohibitively expensive, companies strategically moved toward a higher-volume, lower-deal-value approach. According to McKinsey, this trend peaked in 2021 with around 470 consumer goods deals globally. The distribution of M&A activity varied across subsectors regarding volume and value. Food remained the largest category by deal volume, accounting for about 40%, while beverages and durables together made up an additional 30%. On the other hand, in terms of deal value, personal care led the pack with 38%, primarily driven by large spin-offs of pharmaceutical companies’ consumer businesses. A notable example includes Johnson & Johnson’s $42 billion spin-off of Kenvue last year.
As of late May, several major retailers have reported their Q1 2024 earnings, offering valuable insights into the current state of the U.S. consumer’s sentiments. With consumer spending accounting for approximately 70% of the U.S. economy, shifts in spending patterns significantly impact growth and employment. Walmart, for example, observed changes in customer behavior, with CFO John Rainey noting in the company’s Q1 earnings call:
“Many consumer pocketbooks are still stretched, and we see the effect of that in our business mix as they’re spending more of their paychecks on non-discretionary categories and less on general merchandise. This merchandise mix remains a headwind to margins, but it’s consistent with our expectations.”
This indicates that consumers are prioritizing essential groceries over discretionary items like televisions. Walmart’s earnings suggest that while overall consumer spending remains steady, those with less disposable income are struggling and continue to seek value in their purchases. In any case, despite inflation and challenging market conditions, people still need to eat and buy essentials, making FMCG stocks more resilient compared to other sectors in the stock market.
A retail employee stocking shelves with consumer packaged goods/manufacturing products.
Our Methodology
After a comprehensive analysis of FMCG stocks listed on NYSE and NASDAQ using ETFs and internet rankings, we have curated a selection of the 14 top FMCG stocks to buy now according to hedge fuds.Why are we interested in the stocks that hedge funds pile into? The reason is simple, our research has shown that we can outperform the market by imitating the top stock picks of best hedge funds. Our quarterly newsletter’s strategy picks 14 small and large-caps every quarter and it has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
14 Best FMCG Stocks To Buy Now
14. Unilever PLC (NYSE:UL)
Number of Hedge Fund Holders: 20
Unilever PLC (NYSE:UL), established on September 2, 1929, is a British multinational fast-moving consumer goods company created from the merger of British soap maker Lever Brothers and Dutch margarine producer Margarine Unie. Headquartered in London, Unilever PLC (NYSE:UL) owns a diverse portfolio of popular brands including Ben & Jerry’s, Dove, Hellmann’s, Knorr, Lux, Magnum, Sunsilk, and Wall’s.
On March 19, Unilever PLC (NYSE:UL) announced its intention to spin off its ice cream business as part of its Growth Action Plan (GAP). According to the announcement, the ice cream division achieved sales of €7.9 billion in 2023. Post-separation, Unilever PLC (NYSE:UL) will concentrate on its four primary business units: Beauty & Wellbeing, Personal Care, Home Care, and Nutrition. Meanwhile, the newly formed entity, NewCo, will operate independently, establishing itself as a world-leading ice cream business. By spinning off the ice cream division, Unilever aims to simplify the company’s portfolio and achieve cost savings of €800.0 million over the next three years.
Recently, Redburn-Atlantic upgraded Unilever PLC (NYSE:UL) from Neutral to Buy, setting a price target of GBP51.00. This decision reflects the firm’s positive outlook on Unilever’s financial performance, anticipating a 20% potential upside from its current share price. Additionally, the company exceeded sales growth expectations in Q1, reporting a 4.4% increase in sales and a 2.2% rise in sales volumes, alongside a 2.2% price hike during the quarter.
In the first quarter of 2024, Unilever PLC (NYSE:UL) was included in the portfolios of 20 hedge funds, with a total stake value of $952.2 million. Fisher Asset Management emerged as the largest shareholder, holding a position worth nearly $525.05 million as of Q1 2024.
13. Dollar Tree, Inc. (NASDAQ:DLTR)
Number of Hedge Fund Holders: 39
Dollar Tree, Inc. (NASDAQ:DLTR) is a retail chain operating in the United States, offering a diverse range of products at various price points. Headquartered in Chesapeake, Virginia, the company boasts an extensive network of over 15,000 stores across the 48 contiguous U.S. states and Canada. Leveraging a widespread logistics network comprising 24 distribution centers, Dollar Tree primarily serves price-conscious customers.
That said, not everyone seems bullish on the retailer. Citi recently downgraded Dollar Tree, Inc. (NASDAQ:DLTR) from a Buy to a Neutral rating, reducing the price target from $163 to $120. This adjustment follows concerns over the company’s recent performance and strategic decisions, particularly regarding the Family Dollar segment.
The persistent issues with Family Dollar’s turnaround have raised significant concerns, with management’s decision to explore strategic alternatives suggesting a lack of confidence in resolving these problems, potentially indicating deeper structural issues. Furthermore, the Dollar Tree segment failed to meet its comparable store sales targets in the first quarter, and the implementation of multi-price points has faced execution challenges.
According to Insider Monkey’s fourth-quarter database, 39 hedge funds expressed bullish sentiments towards Dollar Tree, Inc. (NASDAQ:DLTR), the same as the preceding quarter. Mantle Ridge LP, led by Paul Hilal, holds the largest position in the company, with 12.1 million shares valued at $1.6 billion.
12. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 39
General Mills, Inc. (NYSE:GIS) is a leading American multinational company known for producing and marketing branded processed consumer foods, widely distributed through retail channels. The company’s roots date back to its founding near Saint Anthony Falls in Minneapolis, along the Mississippi River, where it initially gained recognition as a major flour milling operation.
General Mills, Inc. (NYSE:GIS) missed analysts’ expectations in Q2 FY2024, reporting a 1.6% year-on-year decline in revenue to $5.14 billion. The company posted a non-GAAP profit of $1.25 per share, up from $1.10 per share in the same quarter last year. Despite improvements in margins leading to an EPS beat, the company fell short in volume growth, organic revenue growth, and total revenue. Additionally, General Mills, Inc. (NYSE:GIS) lowered its full-year revenue outlook, citing a “slower volume recovery.”
Speaking on the results, General Mills Chairman and Chief Executive Officer Jeff Harmening made the following statement:
“While we saw a slower-than-expected volume recovery in the second quarter amid a continued challenging consumer landscape, we generated bottom-line growth thanks primarily to strong HMM cost savings.”
As of the end of Q1 2024, Insider Monkey’s database revealed that 39 hedge funds had invested in General Mills, Inc. (NYSE:GIS). The largest stakeholder was Two Sigma Advisors, managed by John Overdeck and David Siegel, holding approximately 2.63 million shares valued at about $184.13 million.
11. Monster Beverage Corporation (NASDAQ:MNST)
Number of Hedge Fund Holders: 43
Monster Beverage Corporation (NASDAQ:MNST) is a renowned American company specializing in the development, marketing, sale, and distribution of energy drink beverages and concentrates, featuring popular brands like Monster Energy, Relentless, and Burn.
On May 2, 2024, Monster Beverage Corporation (NASDAQ:MNST) unveiled its financial results for the first quarter ended March 31, 2024, demonstrating a performance closely aligned with analyst expectations for earnings per share while highlighting substantial revenue growth. The company reported a significant increase in net sales, climbing by 11.8% to $1.90 billion from $1.70 billion in the same period last year. This growth slightly surpassed the estimated revenue of $1,901.39 million. The net income for the quarter reached $442.0 million, marking an 11.2% year-over-year increase, albeit falling slightly short of the estimated net income of $451.27 million.
On the other hand, Roth/MKM has maintained a Neutral rating on Monster Beverage (NASDAQ: MNST) but lowered the price target from $59.00 to $56.00. The firm’s analyst attributed the reduction to slowing growth in Monster Beverage’s key market, with expectations that the company will continue to explore other beverage segments where it currently has less market dominance. Recently, Monster Beverage Corporation (NASDAQ:MNST) completed a Dutch tender offer, a financial maneuver in which a company buys back its own shares from the market. This action can often increase the value of remaining shares and boost the company’s EPS. However, the expected slowdown in sales growth within the US energy drink sector seems to overshadow the potential benefits of the tender offer.
According to data from Insider Monkey, a total of 43 hedge funds held stakes in Monster Beverage Corporation (NASDAQ:MNST). The most substantial ownership was attributed to Broadwood Capital, led by Neal C. Bradsher, which held a significant stake in the company valued at $491.76 million.
