5 Consumer Staples Stocks Near 52-Week Highs With More Highs – November 23, 2022 | So Good News
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US markets have been witnessing a strong trend since mid-October. After the amazing bull run of the past two years, Wall Street has had a disappointing 2022 so far.
We don’t know if what is happening now is a bear market support rally like we saw from mid-June to mid-August, or a real reversal in the bear market. However, some positive developments are evident this time around the rise in inflation and on the Fed’s side.
We believe that the latest move in US stocks will be the last rally of the year. For this conference, we have selected five consumer stocks that have a good Zacks Rank. These companies – Opinions of the company Conagra Brands Inc. (CAG – free report), Opinions of the company General Mills Inc. (GIS – free report), Opinions of the company Lamb Weston Holdings Inc. (LW – free report), Company opinion JM Smucker Co. (SJM – Free report) and Company opinion MGP Ingredients Inc. (MGPI – Free report).
Positive Growth in the Inflation Rate
The consumer price index and price index for October came in lower than expected. These two data together with the 2022 third quarter price index (PCE) – the Fed’s most popular interest rate – have shown that the hike may be behind us.
Therefore, the Fed can relax its monetary power. The central bank is expected to reduce interest rate growth from the December FOMC meeting. This will help the entire equity market.
Although the Fed has yet to give any sign of a change from its hawkish monetary policies, a section of Fed officials has recently spoken out. Per CNBC, on Nov 22, Cleveland Fed President Loretta Mester said the latest inflation data is promising and will support lower interest rates in the future.
Market participants are assessing whether the final rate hike will remain within 5% or above.
Consumer Staples Immune to the Vagaries of the Economic Cycle
The consumer sector is mature and strong because the demand for such products is not affected by changes in the economy. The consumer goods sector includes companies that provide basic necessities and products that are used on a daily basis. This makes this part defensive in nature.
Therefore, this has become the go-to option for investors, who want to stay safe during high market volatility regardless of internal or external disturbances. Also, the sector is characterized by stability and transparency of income and cash flows. Therefore, adding stocks from the buyer’s market creates more stability in an uncertain market.
Of the 11 broad market sectors – the S&P 500 Index – the energy sector is only trading in good territory with a major rally of 68% so far. However, in the remaining 10 quarters, consumer spending has suffered little, falling slightly by 1.5% year-to-date while the benchmark fell by 16%.
Our Top Picks
We’ve selected five buy stocks that are currently trading near their 52-week highs and to the left. Each of our current picks has a Zacks Rank #2 (Buy). You can see a complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the performance of our stock prices over the past five years.
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Image source: Zacks Investment Research
Concept of the company Conagra Brands has been benefiting from its high-value operations, which contributed to the top line in the first quarter of 2023. During the quarter, profits and sales increased year-on-year. The result has been the strength of the company’s systems, better pricing and the continuation of the Conagra Way playbook.
CAG delivered innovative services and productivity amidst the pressures of rising costs and corporate constraints. Management expects inflation to continue in fiscal 2023. CAG also expects volumes to be affected by inflationary pressures in the second quarter. Pricing and innovation can help Conagra Brands. We expect organic sales to grow 4.9% in 2023, which is at the higher end of CAG’s 4-5% forecast.
Conagra Brands has a growth forecast of 3% for this year (ending May 2023). The Zacks Consensus Estimate for this year’s earnings has risen 0.8% over the past 60 days.
General Mills has been benefiting from its Accelerate strategy, which is reflected in its key requirements. These include competitive advantage, investment in Holistic Margin Management and Strategic Revenue Management and portfolio restructuring.
Recent changes in GIS may encourage long-term growth. In fiscal 2023, management expects an increase in the cost of goods sold. That said, rescue operations and prices should help. GIS is also benefiting from its Pet segment, as seen in the first quarter of 2023 when top and bottom lines grew year over year.
General Mills has a dividend growth rate of 3.8% this year (ending May 2023). The Zacks Consensus Estimate for this year’s earnings has risen 0.2% over the past 30 days.
Lamb Weston produces, distributes, and sells frozen potatoes worldwide. The top line of LW has been benefiting from a strong price/mix, as seen in the first quarter of 2023. .
Lamb Weston’s top notes rose year-over-year in the quarter. LW saw sales growth in all three reporting periods. Although the macro environment remains stable, this management provides results at the end of sales and profit in the financial year 2023. In addition, Lamb Weston has been eager to strengthen the production capacity to increase long-term growth.
Lamb Weston has a growth forecast of 45.7% for this year (ending May 2023). The Zacks Consensus Estimate for this year’s earnings has risen 8.6% over the past 60 days.
JM Smucker is a leading marketer and manufacturer of consumer foods and beverages as well as pet foods and snacks in North America. Although most of SJM’s operations are based in the United States, it also operates around the world.
SJM has a strong reputation for quality food and beverages. SJM mainly covers the areas of coffee, pet food, peanut butter, fruit spreads, baked goods, ready-to-spread condiments, frozen sandwiches, powders, juices and beverages and portion control products.
JM Smucker has a growth forecast of 12.6% next year (ending April 2024). The Zacks Consensus Estimate for current-year earnings has risen 0.1% over the past seven days.
MGP images manufactures and sells alloys and steel products to the manufacturing industry. MGPI’s Distillery Products division primarily offers spirits, alcoholic beverages, and distiller’s food. MGPI’s Ingredient Solutions division offers specialty wheat and protein foods, wheat starches, and essential wheat gluten.
MGP Ingredients has a growth rate of 12.5% this year. The Zacks Consensus Estimate for this year’s earnings has risen 1.9% over the past 30 days.
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