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4 Consumer Staples Stocks to Buy Amid Wall Street Bloodbath
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The Wall Street bloodbath intensified on Aug 5 on renewed fears of the U.S. economy slipping into a recession. The fears, which escalated on Friday, spread into the global markets and rattled stocks worldwide.
The Dow plummeted 1,033.99 points, or 2.6%, to close at 38,703.27, posting its worst day in nearly two years. The S&P 500 declined 3% to finish at 5,186.33, while the tech-heavy Nasdaq, which entered correction territory last week, gave up another 3.4% to end at 16,200.08.
Recession Fears Lead to Massive Selloff
The Dow, the S&P 500 and the Nasdaq posted their biggest three-day percentage declines in more than two years. Investors moved out of risky assets as growing concerns over recession rattled global markets.
Investors fear that the economy is losing ground faster than expected and that the Federal Reserve delayed too long in holding interest rates higher. The CBOE Volatility Index, Wall Street's "fear gauge," was around 38 after hitting a high of 65 to close at its highest level since Oct 28, 2020.
The Federal Reserve kept interest rates unchanged in its last policy meeting in July in the current range of 5.25-5.5%.
The fears started growing on Friday following the release of a weaker-than-expected jobs report that showed only 179,000 job additions in July. More importantly, the report showed that the unemployment rate rose to 4.3%, the highest level since October 2021.
Several market participants expected the Fed to cut interest rates in its July FOMC meeting. They are now expecting the Federal Reserve to implement the first rate cut in September.
However, experts believe that it might be too late as interest rates, which are at a 23-year-high, have already started taking a toll on the economy.
The Federal Reserve last month said that it expects only a single 25-basis-point rate cut this year but market participants believe that that would be too paltry and not sufficient to contain the eroding economy.
Experts are of the opinion that the Federal Reserve will likely go for a 50-basis-point rate cut in September, followed by two more rate cuts of 50 and 25 basis points by the end of December. Also, several experts believe that the Federal Reserve may have a meeting immediately and go for an emergency rate cut before its scheduled September meeting.
However, the picture isn’t clear and worries are likely to prevail till the Federal Reserve arrives at a decision, which could keep markets volatile for a longer period.
Our Choices
Given this situation, it would be wise to invest in defensive stocks like consumer staples. We have chosen three consumer stocks with a low beta (beta greater than 0 but less than 1), a high dividend yield and a favorable Zacks Rank.
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 10.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the past 60 days. CL presently has a Zacks Rank #2. Colgate-Palmolive has a beta of 0.39 and a current dividend yield of 1.95%.
Kimberly-Clark Corporation is principally engaged in the manufacture and marketing of a wide range of consumer products around the world. KMB sells its products to supermarkets, mass merchandisers, drugstores, warehouse clubs, variety and department stores, retail outlets, manufacturing, lodging, office buildings, food service and health care establishments, and high-volume public facilities.
Kimberly-Clark Corporation has an expected earnings growth rate of 9.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.7% over the past 60 days. KMB presently has a Zacks Rank #2. Kimberly-Clark has a beta of 0.37 and a current dividend yield of 3.48%.
The Coca-Cola Company’s strong brand equity, marketing, research and innovation help it to garner a market share of more than 40% in the non-alcoholic beverage industry. KO is putting its best foot forward to evolve its business model to become a total beverage company with something for everyone to drink. The Coca-Cola Company has coped with the industry-wide flattening of soda sales over the years by going on a buying spree and making investments in healthier alternatives like coffee, sparkling water and sports drinks.
The Coca-Cola Company has an expected earnings growth rate of 5.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the past 60 days. KO currently carries a Zacks Rank #2. The Coca-Cola Company has a beta of 0.59 and a current dividend yield of 2.80%.
Philip Morris International Inc. is progressing well with its business transformation in the face of consumers' rising health consciousness and stern regulations to dissuade smoking. To this end, PM has been expanding its reduced risk products (RRPs) or smoke-free products category, as evident from the success of IQOS (a heating tobacco device) that counts among one of the leading RRPs in the industry.
Philip Morris International has an expected earnings growth rate of 6.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the past 60 days. PM currently carries a Zacks Rank #2. Philip Morris International has a beta of 0.58 and a current dividend yield of 4.41%.
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4 Consumer Staples Stocks to Buy Amid Wall Street Bloodbath
The Wall Street bloodbath intensified on Aug 5 on renewed fears of the U.S. economy slipping into a recession. The fears, which escalated on Friday, spread into the global markets and rattled stocks worldwide.
The Dow plummeted 1,033.99 points, or 2.6%, to close at 38,703.27, posting its worst day in nearly two years. The S&P 500 declined 3% to finish at 5,186.33, while the tech-heavy Nasdaq, which entered correction territory last week, gave up another 3.4% to end at 16,200.08.
Recession Fears Lead to Massive Selloff
The Dow, the S&P 500 and the Nasdaq posted their biggest three-day percentage declines in more than two years. Investors moved out of risky assets as growing concerns over recession rattled global markets.
Investors fear that the economy is losing ground faster than expected and that the Federal Reserve delayed too long in holding interest rates higher. The CBOE Volatility Index, Wall Street's "fear gauge," was around 38 after hitting a high of 65 to close at its highest level since Oct 28, 2020.
The Federal Reserve kept interest rates unchanged in its last policy meeting in July in the current range of 5.25-5.5%.
The fears started growing on Friday following the release of a weaker-than-expected jobs report that showed only 179,000 job additions in July. More importantly, the report showed that the unemployment rate rose to 4.3%, the highest level since October 2021.
Several market participants expected the Fed to cut interest rates in its July FOMC meeting. They are now expecting the Federal Reserve to implement the first rate cut in September.
However, experts believe that it might be too late as interest rates, which are at a 23-year-high, have already started taking a toll on the economy.
The Federal Reserve last month said that it expects only a single 25-basis-point rate cut this year but market participants believe that that would be too paltry and not sufficient to contain the eroding economy.
Experts are of the opinion that the Federal Reserve will likely go for a 50-basis-point rate cut in September, followed by two more rate cuts of 50 and 25 basis points by the end of December. Also, several experts believe that the Federal Reserve may have a meeting immediately and go for an emergency rate cut before its scheduled September meeting.
However, the picture isn’t clear and worries are likely to prevail till the Federal Reserve arrives at a decision, which could keep markets volatile for a longer period.
Our Choices
Given this situation, it would be wise to invest in defensive stocks like consumer staples. We have chosen three consumer stocks with a low beta (beta greater than 0 but less than 1), a high dividend yield and a favorable Zacks Rank.
These are Colgate-Palmolive Company (CL - Free Report) , Kimberly-Clark Corporation (KMB - Free Report) , The Coca-Cola Company (KO - Free Report) and Philip Morris International Inc. (PM - Free Report) .
These stocks have seen positive earnings estimate revisions in the last 60 days. 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 10.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the past 60 days. CL presently has a Zacks Rank #2. Colgate-Palmolive has a beta of 0.39 and a current dividend yield of 1.95%.
Kimberly-Clark Corporation is principally engaged in the manufacture and marketing of a wide range of consumer products around the world. KMB sells its products to supermarkets, mass merchandisers, drugstores, warehouse clubs, variety and department stores, retail outlets, manufacturing, lodging, office buildings, food service and health care establishments, and high-volume public facilities.
Kimberly-Clark Corporation has an expected earnings growth rate of 9.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.7% over the past 60 days. KMB presently has a Zacks Rank #2. Kimberly-Clark has a beta of 0.37 and a current dividend yield of 3.48%.
The Coca-Cola Company’s strong brand equity, marketing, research and innovation help it to garner a market share of more than 40% in the non-alcoholic beverage industry. KO is putting its best foot forward to evolve its business model to become a total beverage company with something for everyone to drink. The Coca-Cola Company has coped with the industry-wide flattening of soda sales over the years by going on a buying spree and making investments in healthier alternatives like coffee, sparkling water and sports drinks.
The Coca-Cola Company has an expected earnings growth rate of 5.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the past 60 days. KO currently carries a Zacks Rank #2. The Coca-Cola Company has a beta of 0.59 and a current dividend yield of 2.80%.
Philip Morris International Inc. is progressing well with its business transformation in the face of consumers' rising health consciousness and stern regulations to dissuade smoking. To this end, PM has been expanding its reduced risk products (RRPs) or smoke-free products category, as evident from the success of IQOS (a heating tobacco device) that counts among one of the leading RRPs in the industry.
Philip Morris International has an expected earnings growth rate of 6.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the past 60 days. PM currently carries a Zacks Rank #2. Philip Morris International has a beta of 0.58 and a current dividend yield of 4.41%.