Top 5 Consumer Staples Stocks To Buy In May 2023

The Andersons, Darling Ingredients, Mondelez, Inter Parfums And McCormick Are Top Growth And Value Consumer Staple Stocks To Buy In May 2023.

Investing in consumer staple stocks during times of inflation can be attractive due to their steady demand, pricing power, defensive nature, potential for dividend income, and diversification benefits.

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Here are five growth and value consumer staples stocks to buy in May 2023:

1. The Andersons, Inc. (ANDE)
2. Darling Ingredients (DAR)
3. Mondelez International (MDLZ)
4. Inter Parfums Inc (IPAR)
5. McCormick & Company, Incorporated (MKC)

These five stocks have not uniformly performed since the beginning of the year and operate in different industries. The Andersons gained only 1.47% YTD, while Darling Ingredients has lost 2.3%. On the brighter side, Mondelez performed well, showing a 16.7% rise YTD. Meanwhile, Inter Parfums took off with a remarkable 40.82% increase YTD. Lastly, McCormick & Company is up 8.2% YTD.

When we compare these companies to the broader market, the Consumer Staples Select Sector SPDR Fund (XLP) increased by a modest 2.3% YTD, while the S&P 500 has experienced a stronger rise of 7% YTD.

Using StockViz, we have identified these 5 stocks as having a solid growth and value profile. We’ll dive deeper into each company and its financials in the next section. Here is an article on how to find great stocks in just 3 steps.

Our 5 stock picks visualized on scatterplots. Source: StockViz.com

A look at their company profile and financials

Our 5 stocks meet the specified requirements for positive growth and performance indicators.

They all exhibit a positive revenue per share 3-year compound annual growth rate (CAGR), indicating consistent revenue growth over the past three years. Their operating cash flow per share 3-year CAGR is positive, highlighting healthy cash flow generation. Lastly, these stocks maintain a positive average return on equity (ROE) over the past three years, indicating effective usage of shareholder equity.

Here is a look into their company profile and key financials with StockViz:

• The Andersons (ANDE): The Andersons is a diversified company that operates in various sectors, including agriculture, grain, ethanol, plant nutrients, and railcar leasing. They provide services and products to support the agriculture industry and related markets.

• Darling Ingredients (DAR): Darling Ingredients is a global provider of sustainable natural ingredients from edible and inedible bio-nutrients. They collect and repurpose animal by-products, bakery residuals, and used cooking oil to create valuable ingredients for various industries, including food, feed, and fuel.

• Mondelez (MDLZ): Mondelez is a multinational food and beverage company specializing in snacks. They own popular brands such as Oreo, Cadbury, Toblerone, and Ritz. Mondelez offers a wide range of products including chocolates, biscuits, confectionery, and beverages.

• Inter Parfums (IPAR): Inter Parfums is a fragrance company that develops, manufactures, and distributes a variety of perfumes and cosmetics. They hold licenses for well-known luxury brands, including Montblanc, Jimmy Choo, Karl Lagerfeld, and Coach, and create and market their own brands as well.

• McCormick & Company (MKC): McCormick & Company is a global leader in the manufacturing, marketing, and distribution of spices, seasonings, and flavorings. They offer a wide range of products used by consumers, foodservice establishments, and food manufacturers worldwide. McCormick is known for its popular spice and seasoning brands, including McCormick, Lawry’s, and Old Bay.

Types of consumer staples stocks

Consumer staples stocks can be classified into several types based on their specific characteristics and the industries they operate in. Here are some common types of consumer staples stocks:

1. Food and Beverage: Manufacturers and distributors of food and beverage products. They offer essential items like packaged foods, beverages, snacks, and dairy products. Examples include The Coca-Cola Company, PepsiCo, Nestlé, and General Mills.
2. Personal Care and Hygiene: Companies involved in the production and sale of personal care and hygiene products such as cosmetics, skincare, and oral care products. Examples include Procter & Gamble, Colgate-Palmolive, Unilever, and Kimberly-Clark.
3. Household Products: Companies that manufacture and market various household items such as cleaning supplies, detergents, paper products, and home improvement goods. Examples include The Clorox Company, Reckitt Benckiser Group, Church & Dwight Co., and The Home Depot.
4. Pharmaceuticals: Produce medications and healthcare products, including prescription drugs, over-the-counter medicines, and medical devices. Major players include Johnson & Johnson, Pfizer, Novartis, and GlaxoSmithKline.
5. Tobacco and Alcohol: These companies manufacture and distribute cigarettes, cigars, spirits, beer, and wine. Examples include Altria Group, Philip Morris International, Diageo, and Anheuser-Busch InBev.

Advantages of investing in consumer staples stocks

Investing in consumer staples stocks offers several advantages that make them attractive as long term investments to investors:

1. Stability and Resilience: Consumer staples stocks offer stability during market volatility and economic downturns due to the consistent demand for essential products.
2. Recession Resistance: These stocks are known for their ability to withstand economic downturns as people continue to purchase essential items even during tough times.
3. Dividend Income: Many consumer staples companies have a history of paying regular dividends, providing investors with a reliable income stream.
4. Long-Term Performance: Consumer staples stocks have a track record of delivering competitive long-term returns, thanks to their steady revenue and cash flow generation.
5. Diversification Benefits: Including consumer staples stocks in a portfolio can enhance diversification, as they often have low correlations with other sectors, reducing overall portfolio risk.

Risks of investing in consumer staples stocks

1. Changing Consumer Preferences: Consumer preferences and trends can shift, impacting the demand for specific consumer staples products.
2. Regulatory Challenges: Consumer staples stocks can face regulatory hurdles and changes in government policies such as product life cycle management or ESG regulations that may affect their operations and profitability.
3. Competitive Landscape: Intense competition within the consumer staples sector can impact market share and profitability for individual companies.
4. External Market Forces: Factors like raw material costs, supply chain disruptions, and geopolitical events can impact the performance of consumer defensive stocks.

It is important to keep in mind that this article is not intended as specific investment advice, but rather serves to educate investors about potential investment strategies and tools. As always, it is essential to conduct thorough research and analysis before making any investment decisions, and to consult with a professional financial advisor or broker if necessary.