Stocks in the Zacks Consumer Staples sector carry a defensive nature, as these companies’ products have an advantageous ability to generate consistent demand in the face of many economic situations.
Three top-ranked stocks from the sector – Ollie’s Bargain Outlet OLLI, Philip Morris PM, and Pilgrim’s Pride PPC – could all be considerations for investors looking to heighten their portfolio’s defense.
Let’s take a closer look at each one.
Ollie’s Boosts Sales Outlook
Ollie’s Bargain Outlet, a current Zacks Rank #2 (Buy), is a unique, fast-growing, extreme-value discount retailer of brand-name merchandise. The revisions trend for its current fiscal year has remained bullish, with the $3.28 Zacks Consensus EPS estimate suggesting 12% year-over-year growth.
Image Source: Zacks Investment Research
The company’s Q2 earnings release brought about selling pressure but the results were overall strong, likely a reflection of some profit-taking after a strong run. Concerning the highlights in the print, OLLI’s comparable store sales saw 5.8% growth year-over-year alongside a 30-basis point increase to its operating margin.
The company raised its current-year sales and earnings outlook following the print. Below is a chart illustrating OLLI’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
PM Keeps Paying Investors
Philip Morris International is a leading international tobacco company working to deliver a smoke-free future, evolving its portfolio for the long term to include products outside of the tobacco and nicotine sector.
The stock sports a favorable Zacks Rank #2 (Buy), with earnings expectations increasing across the board over recent months.
Image Source: Zacks Investment Research
Philip Morris rewards its shareholders handsomely, with its annual dividend presently yielding a sizable 4.1% annually. Dividend growth is also apparent, with PM carrying a respectable 2.6% five-year annualized dividend growth rate.
Please note that the chart below is on a trailing twelve-month basis.
Image Source: Zacks Investment Research
PPC Sees Robust Growth Expectations
Pilgrim's Pride, a current Zacks Rank #2 (Buy), is one of the largest chicken companies in the US, Mexico, and Puerto Rico. The earnings estimate revisions trend has been red-hot for its current fiscal year, up more than 120% over the last year and suggesting 180% growth year-over-year.
Image Source: Zacks Investment Research
Shares aren’t expensive given the forecasted growth, with the current 9.5X forward 12-month earnings multiple beneath the 11.3X five-year median and five-year highs of 18.8X. The current PEG ratio works out to 0.2X, reflecting that investors are paying a fair price for the forecasted growth.
Image Source: Zacks Investment Research
Shares have been scorching hot in 2024, gaining 63% and widely outperforming relative to the S&P 500. Better-than-expected quarterly results that have led to positive earnings estimate revisions have driven the move.
Image Source: Zacks Investment Research
Bottom Line
Consumer Staples stocks can heighten a portfolio’s defense, as these companies’ products generate reliable and consistent demand in the face of many economic situations.
In addition, many of these stocks pay dividends, undoubtedly a significant boost to portfolios.
For those looking to shield themselves against volatility, all three stocks above – Ollie’s Bargain Outlet OLLI, Philip Morris PM, and Pilgrim’s Pride PPC – could be of interest.
All three have seen their near-term earnings outlooks improve as of late, a major positive.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>Philip Morris International Inc. (PM) : Free Stock Analysis Report
Pilgrim's Pride Corporation (PPC) : Free Stock Analysis Report
Ollie's Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
