The stock market could experience a correction soon due to a resurgence of COVID-19 cases in the United States with the rapid spread of the Delta variant. However, many analysts expect a market correction of 10% to 15% will represent a “significant opportunity” to invest in quality stocks…
Amid the volatility concerns, consumer staples stocks could be good bets considering the inelastic demand for their companies’ products. The S&P 500 Consumer Staples Sector Index has gained 14.1% over the past year and 5.4% year-to-date. Companies operating in consumer staples should grow substantially amid the potential market slowdown because consumers tend to panic and purchase such items in bulk quantities.
Given this backdrop, we think leading consumer staples stocks PepsiCo, Inc. (PEP – Get Rating), Costco Wholesale Corporation (COST – Get Rating), Altria Group, Inc. (MO – Get Rating), and Sysco Corporation (SYY – Get Rating) should be good additions to one’s portfolio.
PepsiCo, Inc. (PEP – Get Rating)
PEP is a food and beverage company that operates in more than 200 countries. The Harrison, N.Y.-based company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East, and South Asia; and Asia Pacific, Australia and New Zealand and China Region.
On July 1, PEP announced its plan to expand its food and beverage portfolio in the European Union member states and committed to accelerating its shift to a healthier snacks’ portfolio. As health consciousness is rising among consumers, an enhanced portfolio of healthier products should be widely demanded, given its worldwide market reach.
On June 24, Fritos®, one of the flagship brands from PepsiCo’s Frito-Lay division, collaborated with Papa Murphy’s®, the largest Take ‘n’ Bake pizza brand in the nation, to introduce a new limited-edition pizza. This collaborative venture by the two leading brands should allow PEP to generate significant revenues.
PEP’s net revenues increased 20.5% year-over-year to $19.22 billion in its fiscal second quarter ended June 12. Its operating profit grew 34.9% from its year-ago value to $3.13 billion. PEP’s net income was $2.37 billion, indicating a 43.1% rise year-over-year. The company’s EPS increased 44.1% year-over-year to $1.70.
The Street expects PEP’s revenues to increase 6.5% year-over-year to $19.26 billion in its fiscal third quarter, ending September 2021. A $1.75 consensus EPS estimate for the current quarter indicates a 5.4% rise from the same period last year. PEP also has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters.
Shares of PEP have gained 14.4% over the past six months. The stock gained 14.7% over the past year.
PEP has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
PEP also has a B grade for Sentiment and Quality. Among the 37 stocks in the Beverages industry, it is ranked #7.
To see additional POWR ratings for Growth, Stability, Momentum, and Value, click here.
Costco Wholesale Corporation (COST – Get Rating)
COST operates membership warehouses in the United States and other countries. The Issaquah, Wash.-based company provides branded and private-label products in a range of merchandise categories. It also offers dry and packaged foods, groceries, appliances, and electronics. COST maintains an online presence too. The company had 809 warehouses worldwide as of April 22.
On July 13, COST declared a $0.79 per share quarterly dividend on its common stock, payable August 13, 2021.
On July 8, it reported $18.92 billion in net sales for the five weeks ended July 4, 2021, indicating an increase of 16.9% versus the same period last year. This improvement in net sales demonstrates the company’s…
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