The debate rages on.
Some notable investors are betting on a market crash in coming months prompted by a year-long recession talks. Others are forecasting a so called “soft landing,” where the economy manages to avert an economic recession despite interest rates remaining elevated.
For its part, the U.S. Federal Reserve continues to prep the economy for a soft landing, though no one should expect interest rates to decrease anytime soon.
As for markets, it’s gotten a little harder to read the tea leaves. After posting historic growth in the first six months of 2023, equities have stalled in August. Escalating economic troubles in China, the ongoing war in Ukraine, and mixed corporate earnings have also weighed on market performance. Where we land in Q4 is anyone’s guess. But whether or not we get a market crash, here are three reliable consumer stocks to buy.
Walmart (WMT)
It’s hard to go wrong with retailer Walmart (NYSE:WMT). Regardless of economy, Walmart sells essential consumer products at discounted prices, including groceries. Walmart is now the largest U.S. grocery store chain, controlling about a quarter of the market, ahead of both Costco (NASDAQ:COST) and Kroger (NYSE:KR). Strong grocery sales helped to power Walmart’s recent Q2 financial results that beat Wall Street forecasts across the board.
In addition to groceries, Walmart credited an uptick in online sales with its Q2 outperformance. The company’s e-commerce sales rose 24% year over year (YOY), while in-store sales increased 6.4% YOY. Walmart expects the current full year sales to increase between 4% and 4.50%, up from previous guidance for net sales gains of 3.50%.
Hard or soft landing, WMT stock should continue to perform strongly. The company’s share price has risen nearly 20% in the last 12 months.
Procter & Gamble (PG)
Procter & Gamble (NYSE:PG) is viewed by many as the ultimate consumer staple stock. After all, this is the company behind category-leaders such as Tide laundry detergent, Crest toothpaste, Gillette razor blades, and Duracell batteries. Consumers the world over depend upon Procter & Gamble products, helping to drive more than $80 billion in annual sales. The company thrived during the pandemic as people hoarded its many household and hygiene essentials.
More recently, PG is struggling as inflation fatigued consumers seeking cheaper alternatives to its more expensive name brand products. Elevated consumer prices have pushed many shoppers to off-label and generic store brands, which has hurt the PG’s recent financial performance. Procter & Gamble has compensated for the decrease in sales volumes with price increases that have averaged 10% for its various products. The company has acknowledged that it has likely raised prices as much as possible.
The good news is that should we get a soft landing in the event of a recession. It will likely lead to consumers feeling confident to return to Procter & Gamble’s products. PG stock is essentially flat on the year, up only 1% since January.
Coca-Cola (KO)
Coca-Cola (NYSE:KO) is about as reliable a stock as one can get. The beverage giant’s earnings almost always beat analysts’ consensus forecasts, and its stock rarely experiences big price swings. Also, it offers a reliable dividend that yields more than 3%.
No wonder KO stock is a favorite holding of notorious value investor Warren Buffett. Coca-Cola truly enjoys exceptionally strong brand loyalty and has pricing power, meaning it can lift prices without losing customers.
Coke just reported the latest in a string of earnings beats, powered by price increases in response to inflation and higher commodity costs. Soft landing or not, Coca-Cola sees more growth ahead. The company raised its forward guidance for revenue growth, predicting an increase of 8% to 9% for this year, up from a previous growth forecast of 7% to 8%. KO stock is down a slight 4% this year, presenting a decent entry point for this consumer staple stock.
