The stock market can be a fickle beast, with trends constantly shifting and investor sentiment changing rapidly. However, consumer staples stocks tend to hold their ground in economic uncertainty. These companies provide essential products needed in any economic climate, making them a safe haven for investors seeking stability.
Within the consumer staples sector, hidden gems that do not get the respect they deserve exist. They are household names with a long history of success, strong brand recognition and consistent dividend payouts. This makes them attractive options for investors seeking growth and income.
Now, let’s discover the top three underappreciated consumer staples stocks to buy now.
Procter & Gamble (PG)
Procter & Gamble (NYSE:PG), often called P&G, is a behemoth in the consumer goods industry. They own some of the world’s most recognizable consumer care brands, including Tide, Bounty, Charmin, Gillette and Oral-B.
One of P&G’s biggest strengths is its global footprint. The company operates in more than 180 countries, giving it a diversified revenue base and insulation from economic fluctuations in any one region. Additionally, P&G has a proven track record of navigating economic downturns. The company’s essential product categories and pricing power have given it a competitive edge, and its liquidity remains strong.
Although their top line growth struggled in the 2023 fiscal year, management is actively working to drive bottom line growth. So much so that CEO Jon Moeller raised their core EPS guidance in Q2 FY24. While P&G might not be a high-growth stock, it provides investors with a stable and reliable dividend. This is a bonus for investors looking for a safe place to park their cash during uncertain economic times.
Hershey (HSY)
Hershey (NYSE:HSY) is the iconic chocolate company behind the notorious Hershey’s Kisses, Reese’s Peanut Butter Cups and Twizzler’s. Their brand is synonymous with chocolate and sugary sweets, which thrive in almost any macroeconomic environment.
Hershey’s brand loyalty and global footprint have made them indispensable to the snack category. This brand loyalty and pricing power has allowed Hershey to maintain healthy profit margins while returning cash to shareholders. Since its founding in 1894, they have grown into the 4th largest chocolate company globally by revenue. They have been actively expanding their international presence, particularly in high-growth Asian markets.
In FY23, Hershey’s revenue grew 7% YOY to $11.16 billion. Net income increased 13% to $1.86 billion, or $9.06 per share. The company remained extremely resilient despite historic cacao prices. Ongoing extreme weather events and climate change in the West Africa region have largely affected the supply of the commodity. Despite this, Hershey raised its quarterly dividend 15% to $1.37 per share in February. This makes Hershey one of the top underappreciated consumer staples stocks to buy in 2024.
PepsiCo (PEP)
PepsiCo (NASDAQ:PEP), the arch-rival of Coca-Cola, is a global leader in the food and beverage industry. PepsiCo’s global reach and brand recognition are its significant strengths, allowing it to tap into a vast and diverse customer base.
The company’s product portfolio includes brands like Pepsi, Gatorade, Frito-Lay and Quaker Oats. Like P&G, PepsiCo often benefits from economic downturns as consumers often trade down to more affordable food and beverage options. Additionally, PepsiCo constantly expands its product portfolio and keeps up with evolving consumer preferences. This includes the healthy snack segment, which has exploded in popularity in the last decade.
PepsiCo’s focus on innovation and commitment to its shareholders makes it stand out. They just recently announced a 7% hike in their dividend, marking their 52nd annual increase. Moreover, the company continues to see strength in the LATAM markets, and they have put forth a continued focus on international expansion. PepsiCo management is guiding approximately 4% organic revenue growth and 8% EPS growth in FY24. With a strong brand, global reach and focus on innovation, PepsiCo is among the best consumer staples stocks set to soar in 2024 and beyond.
On the date of publication, Terel Miles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
