Consumer staples are considered safe havens in turbulent markets due to their inelastic demand profiles. The flip side is that they frequently fall behind growth industries when times are good, and this perception became a reality over the past six months as the sector was down 3.3% while the S&P 500 was up 9.7%.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. On that note, here is one consumer stock boasting a durable advantage and two best left ignored.
Two Consumer Staples Stocks to Sell:
Spectrum Brands (SPB)
Market Cap: $1.82 billion
A leader in multiple consumer product categories, Spectrum Brands (NYSE: SPB) is a diversified company with a portfolio of trusted brands spanning home appliances, garden care, personal care, and pet care.
Why Is SPB Risky?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Anticipated sales growth of 1.8% for the next year implies demand will be shaky
- Underwhelming 1% return on capital reflects management’s difficulties in finding profitable growth opportunities
Spectrum Brands’s stock price of $78.35 implies a valuation ratio of 16.1x forward P/E. If you’re considering SPB for your portfolio, see our FREE research report to learn more.
BellRing Brands (BRBR)
Market Cap: $1.04 billion
Spun out of Post Holdings in 2019, Bellring Brands (NYSE: BRBR) offers protein shakes, nutrition bars, and other products under the PowerBar, Premier Protein, and Dymatize brands.
Why Are We Cautious About BRBR?
- Modest revenue base of $2.33 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Estimated sales growth of 1.3% for the next 12 months implies demand will slow from its three-year trend
- Efficiency has decreased over the last year as its operating margin fell by 7.3 percentage points
At $8.91 per share, BellRing Brands trades at 6.8x forward P/E. Read our free research report to see why you should think twice about including BRBR in your portfolio.
One Consumer Staples Stock to Watch:
Keurig Dr Pepper (KDP)
Market Cap: $39.62 billion
Born out of a 2018 merger between Keurig Green Mountain and Dr Pepper Snapple, Keurig Dr Pepper (NASDAQ: KDP) is a consumer staples powerhouse boasting a portfolio of beverages including sodas, coffees, and juices.
Why Do We Like KDP?
- Products are seeing elevated demand as its unit sales averaged 4.8% growth over the past two years
- Economies of scale give it negotiating power with retailers and suppliers as well as fixed cost leverage when sales grow
- Demand for the next 12 months is expected to accelerate above its three-year trend as Wall Street forecasts robust revenue growth of 72.3%
Keurig Dr Pepper is trading at $29.26 per share, or 12.2x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
