In this article, we’ll take a look at the 12 best-performing consumer staples stocks in January. If you want to see more of the best performing consumer goods in January, head straight to 5 Best Performing Consumer Staples Stocks in January.
Demand for many consumer products is not changing that much in the near future.
Although economic conditions may worsen, the overall demand for food will remain largely the same or increase as the population grows.
Likewise, overall demand for basic consumer products such as toothpaste or laundry detergent will not change much despite changes in economic conditions. Because the toothpaste or detergent is considered essential and does not cost much, many consumers continue to buy the products and reduce spending on more expensive and less necessary products in tougher economic times.
Individual company demand may change more than total sector demand
Although the aggregate demand for many consumer goods may not change as much, the individual demand of consumer goods companies changes more frequently and sometimes quite substantially.
If a competitor does a good job at marketing, a leading consumer product may lose market share and may not make as much profit as the market expects.
If the leading consumer food does well in terms of new product launches or growth in new emerging markets, it could potentially bring in more profit than the market expects, even though overall consumer food demand remains largely the same.
If there is high inflation like what happened in 2022, some of the more premium consumer goods brands may not sell as much as consumers will switch to cheaper alternatives to save money.
Consumer Staples ETF
In terms of consumer staples ETFs, the Consumer Staples Select Sector SPDR® Fund (XLP) “seeks to provide effective performance of the consumer staples sector of the S&P 500 Index.” Specifically, the ETF “seeks to provide accurate exposure to companies from the U.S. food and staples, beverage, grocery, tobacco, household, and personal products retail industries”
In terms of ETF characteristics as of January 30, 2023, The Consumer Staples Select Sector SPDR® Fund (XLP) has a weighted P/E ratio of 20.97, a P/E ratio of 5.44 and an estimated value of 3-5 years EPS growth of 6.74%.
The ETF has an inception date of December 16, 1998 and a gross expense ratio of 0.10%.
Because many leading consumer staples are dividend stocks given their relatively stable businesses, The Consumer Staples Select Sector SPDR® Fund (XLP) has a 30-day SEC yield of 2.55%.
The performance of the S&P 500 in January
Relative to January, the S&P 500 rose 6.6% for the month as US fourth-quarter GDP growth was stronger than expected and as inflation showed signs of potentially peaking last year.
Given that the Federal Reserve is expected to raise interest rates as early as this year, stocks could fall if economic data misses expectations. As a result, it may be a good idea to have a well-diversified portfolio of blue-chip stocks across many different sectors.
Niloo / Shutterstock.com
Methodology
For our list of the 12 best-performing consumer staples stocks in January, we took the 33 holdings of The Consumer Staples Select Sector SPDR® Fund (XLP) as of January 30.
From stocks, we picked the top 12 performers in terms of year-to-date performance as of January 31, according to Finviz.com.
Given that leading consumer staples stocks are typically not very volatile, many of the 12 best-performing stocks did not outperform the S&P 500’s 6.6% rally in January. In fact, the 12 listed are the only 12 positive for the year to date as of 1/31 among the 33 holdings.
12 Best-Performing Consumer Staples Stocks in January
12. The Kroger Co. (NYSE:KR)
Annual performance as of January 31: 0.11%
Number of hedge fund holders: 49
Kroger Co. (NYSE:KR) is a leading grocery chain whose stock is up about 0.11% this year as of January 31st. While 0.11% isn’t very good, the performance still ranks the stock at #12 on our list of the 12 best performing consumer staples stocks in January, given that many other stocks in the sector are lower than the beginning of the year.
Kroger Co. (NYSE: KR ) is currently trying to get regulatory approval to complete its purchase of Albertsons, which would give the company more scale and negotiating power if the deal goes through. The companies currently hope to successfully complete the merger in 2024.
Along with The Estee Lauder Companies Inc. (NYSE:EL), Lamb Weston Holdings, Inc. (NYSE:LW) and Costco Wholesale Corporation (NASDAQ:COST), The Kroger Co. (NYSE:KR) was the top performing consumer staples in January.
11. Church & Dwight Co., Inc. (NYSE:CHD)
Annual performance as of January 31: 0.31%
Number of hedge fund holders: 40
Church & Dwight Co., Inc. (NYSE:CHD) is a consumer products leader with a portfolio of well-known brands such as Arm & Hammer and OxiClean. While shares of Church & Dwight Co., Inc. (NYSE:CHD) rose 0.31% in January, they are still down 21.5% over the past year as inflation challenges demand. In the third quarter, the company’s organic sales decreased 0.7% year-over-year due to an 8.5% volume decline, partially offset by positive prices of 7.8%. However, if inflation normalizes over the long term, Church & Dwight Co., Inc. (NYSE:CHD) may have more upside potential.
10. SYSCO Corporation (NYSE:SYY)
Year-to-date performance as of January 31: 1.32%
Number of hedge fund holders: 40
SYSCO Corporation (NYSE:SYY) is up 1.32% year-to-date through the end of January, as the leading food distribution company’s valuation improved slightly against the higher S&P 500. Given that many investors own the stock because of its 2.53% dividend yield, the stock’s valuation has declined as interest rates have increased significantly in 2022.
If interest rates normalize over the long term, there is potential for SYSCO Corporation (NYSE:SYY) to potentially get a higher valuation if it maintains its earnings growth. When interest rates normalize is up for debate, however, as many believe it could take at least a few years. SYSCO Corporation (NYSE:SYY) ranks 10th on our list of the 12 best performing consumer staples stocks in January.
9. Walmart Inc. (NYSE:WMT)
Year-to-date performance as of January 31: 1.47%
Number of hedge fund holders: 68
Shares of leading discount retailer Walmart Inc. (NYSE:WMT) has roughly doubled since the start of 2013 on the company’s organic growth, and shares rose 1.47% in January as the company benefits from rising inflation in 2022 with more customers shopping in his shops. Although inflation is expected to ease this year, it is still expected to be higher than normal, and that would offer more opportunities to Walmart Inc. (NYSE: WMT) to continue to grow its sales through this route. Of the 920 hedge funds in our database, 68 held shares of Walmart Inc. (NYSE: WMT ) at the end of Q3.
8. Molson Coors Beverage Company (NYSE:TAP)
Year-to-date performance as of January 31: 2.06%
Number of hedge fund holders: 34
Molson Coors Beverage Company (NYSE:TAP) is a leading beer company whose shares rose 2.06% in January. For the third quarter, the company’s net sales rose 4% year-over-year, and its adjusted income before income taxes fell 5% year-over-year. On a constant currency basis, however, net sales increased 7.9% year-over-year and adjusted income before income taxes rose 0.5% year-over-year. The increase was Molson Coors Beverage Company’s (NYSE:TAP) sixth straight quarter of top-line growth on a constant currency basis.
7. Monster Beverage Corporation (NASDAQ:MNST)
Year-to-date performance as of January 31: 2.51%
Number of hedge fund holders: 39
Monster Beverage Corporation ( NASDAQ:MNST ) has been one of the best performing consumer goods stocks over the past two decades, as both the company’s sales and earnings per share have increased given the company’s strong brand. The leading energy drink maker rose another 2.51% in January as the market remains bullish on the company’s future EPS growth potential. In terms of consensus estimates, analysts estimate that Monster Beverage Corporation (NASDAQ:MNST) will earn $2.31 per share in 2022, $3.04 per share in 2023 and $3.59 per share in 2024.
6. Philip Morris International Inc. (NYSE:PM)
Annualized performance as of January 31: 2.99%
Number of hedge fund holders: 63
Shares of tobacco giant Philip Morris International Inc. (NYSE: PM ) rose 2.99% in January as cooling inflation data over the past few months may have caused some capital to move back into top dividend stocks. In terms of dividends, Philip Morris International Inc. (NYSE:PM) has a dividend yield of about 4.87%. If interest rates don’t rise too much, top dividend stocks could be more attractive if they maintain their earnings growth. However, how much interest rates will rise depends on the Federal Reserve and economic data, not current market valuations.
Like Philip Morris International Inc. (NYSE:PM), The Estee Lauder Companies Inc. (NYSE:EL), Lamb Weston Holdings, Inc. (NYSE:LW) and Costco Wholesale Corporation (NASDAQ:COST) were among the best performing consumer staples stocks in January.
Click to continue reading and see the 5 best performing consumer staples stocks in January.
Suggested articles:
Disclosure: None. 12 Best-Performing Consumer Staples Stocks in January was originally published on Insider Monkey.