We recently published a list of 12 Best FMCG Stocks To Buy According to Hedge Funds. In this article, we are going to take a look at where Keurig Dr Pepper Inc. (NASDAQ:KDP) stands against other 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.

READ ALSO: 12 Undervalued Cyclical Stocks to Buy Right Now and 10 High Growth Financial Stocks To Invest In.

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.

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).

Keurig Dr Pepper Inc. (NASDAQ:KDP)

Number of Hedge Fund Holders: 38

Keurig Dr Pepper Inc. (NASDAQ:KDP) is a leading non-alcoholic beverage company in North America. It produces and sells both hot and cold drinks, including sodas such as Dr Pepper, and Canada Dry, juices like Mott’s, coffee from Green Mountain Coffee Roasters, and more. The company also makes the Keurig brewing system, which allows people to make single cups of coffee using K-Cup pods.

On January 17, Lauren Lieberman, analyst at Barclays maintained a Buy rating on the stock, while keeping the price target of $36. Oakmark Select Fund in its fourth quarter investor letter for 2024 stated they like the soft drink portfolio and impressive track record of the volume and market share growth. During the fiscal third quarter of 2024, the company increased its net sales by 2.3%, with net income growing 18.9% year-over-year. The US refreshment beverages segment was a notable contender with a growth of 5.3%, driven by volume/mix growth and higher prices. It is one of the best FMCG stocks to buy right now.

Oakmark Select Fund stated the following regarding Keurig Dr Pepper Inc. (NASDAQ:KDP) in its Q4 2024 investor letter:

“Keurig Dr Pepper Inc. (NASDAQ:KDP) is one of North America’s leading beverage companies, with dominant positions in single-serve coffee and flavored soft drinks. The soft drink portfolio has an impressive track record of volume growth and market share gains. We believe this performance can continue due to favorable demographic trends, brand strength, and distribution advantages. Recently, weakness in the Keurig coffee division caused the stock price to come under pressure. However, we believe these industry-wide challenges will prove transitory because coffee remains a popular beverage. Keurig’s coffee division is poised to capitalize on this demand with the largest installed base of single-serve brewers and ample runway to increase household penetration. At the current quote, the market ascribes minimal value to Keurig. We were happy to purchase shares in this above-average business at a discount to the market multiple, other beverage peers and private market transactions.”

Overall, KDP ranks 9th on our list of best FMCG stocks to buy according to hedge funds. While we acknowledge the potential of KDP to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KDP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

Disclosure: None. This article is originally published at Insider Monkey.