5 Consumer Staples Stocks to Buy as Inflation Remains High

The Federal Reserve’s fight to curb sky-high inflation continues. Although inflation has eased sharply over the past year, it remains stubbornly higher than the central bank’s 2% target as price pressures remain elevated.

The Commerce Department reported on Apr 28 that the personal consumption expenditure (PCE) price index, a key inflation gauge of the Federal Reserve, increased 2.7% in March on a year-over-year basis, surpassing the consensus estimate of a rise of 2.6%. PCE rose 2.5% in February.

Core PCE, which excludes the volatile food and energy costs, increased 2.8% in March. Although it held steady with February’s increase, it came in higher than the consensus estimates of a rise of 2.7%.  

Month over month, both PCE and the core PCE index rose 0.3% in March, in line with economists’ expectations and matching the increase in February.

Higher prices of services played a major role in pushing the PCE index in March as they rose 0.5% compared to 0.3% in February. Also, housing costs and utilities, which include rents, drove the index up. Cost of housing and rents rose 0.5% in March.

The report came a day after data showed that the U.S. economy grew at a modest pace of 1.6% in the first quarter, a lot lower than the 3.4% growth in the final quarter of 2023 and the consensus estimate of growth of 2.2%.

Rising inflation and a slowing economy have raised uncertainty over the timing of interest rate cuts by the Federal Reserve. This has also turned markets volatile again, a situation that could continue longer and doesn’t bode well for the broader economy.

Our Choices  

Given this situation, it would be wise to invest in defensive stocks like consumer staples, which have a favorable Zacks Rank and are likely to strengthen one’s portfolio. Five such stocks are Colgate-Palmolive Company CL, Grocery Outlet Holding Corp. GO, Pilgrim's Pride Corporation PPC, Lifeway Foods, Inc. LWAY and The Vita Coco Company, Inc. COCO. Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Colgate-Palmolive Company’s business strategy closely defines efforts to increase its leadership in key product categories through innovation in core businesses, tracking adjacent categories’ growth and expansion into new markets and channels. Due to the shift of consumer preference to organic and natural ingredients, CL is expanding its Naturals range, including Naturals toothpaste.

Colgate-Palmolive Company has an expected earnings growth rate of 8.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 60 days. CL presently has a Zacks Rank #2.

Grocery Outlet Holding Corp. is a high-growth, extreme-value retailer of quality, name-brand consumables and fresh products that are sold through a network of independently owned and operated stores. Notably, GO’s stores offer a fun, treasure hunt shopping experience in an easy-to-navigate, “small-box” format of size 15,000-20,000 square feet.

Grocery Outlet has an expected earnings growth rate of 10.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.5% over the last 60 days. GO currently has a Zacks Rank #2.

Pilgrim's Pride Corporation is engaged in the processing, production, marketing and distribution of frozen, fresh as well as value-added chicken products. PPC offers its services in the United States, Mexico, France, the Netherlands, Puerto Rico and Mexico through a number of distributors, retailers and food service operators.

Pilgrim's Pride’s expected earnings growth rate for the current year is 78.1%. The Zacks Consensus Estimate for current-year earnings has improved 5.6% over the past 60 days. PPC currently carries a Zacks Rank #2.

Lifeway Foods, Inc. produces Kefir, a drinkable product similar to, but distinct from yogurt, in several flavors sold under the name Lifeway's Kefir.

Lifeway Foods’ expected earnings growth rate for the current year is 33.1%. The Zacks Consensus Estimate for current-year earnings has improved 13.6% over the past 60 days. LWAY currently sports a Zacks Rank #1.

The Vita Coco Company, Inc. provides a beverage platform. COCO’s brands include coconut water, Vita Coco; clean energy drink Runa; sustainable enhanced water, Ever & Ever and protein-infused water, PWR LIFT.

The Vita Coco Company’sexpected earnings growth rate for the current year is 24.3%. The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the past 60 days. COCO presently has a Zacks Rank #2.

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Free: See Our Top Stock And 4 Runners Up

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Vita Coco Company, Inc. (COCO) : Free Stock Analysis Report

Colgate-Palmolive Company (CL) : Free Stock Analysis Report

Lifeway Foods, Inc. (LWAY) : Free Stock Analysis Report

Pilgrim's Pride Corporation (PPC) : Free Stock Analysis Report

Grocery Outlet Holding Corp. (GO) : Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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