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. This trade-off has yet to emerge as the sector has posted a 10.3% return over the past six months, almost identical to the S&P 500.
Although these companies have produced results lately, only a few will shine over the long term because basic goods like paper towels have low switching costs, leading to fierce competition. With that said, here are three consumer staples stocks we’re swiping left on.
Market Cap: $198 million
Industry Segment: Personal Care
Known for its Optavia program that combines portion-controlled meal replacements with coaching, Medifast (NYSE:MED) has a broad product portfolio of bars, snacks, drinks, and desserts for those looking to lose weight or consume healthier foods.
Why Are We Out on MED?
Medifast’s stock price of $18.59 implies a valuation ratio of 37.6x forward price-to-earnings. Read our free research report to see why you should think twice about including MED in your portfolio, it’s free.
Market Cap: $935.2 million
Industry Segment: Beverages, Alcohol, and Tobacco
Headquartered in Atchison, Kansas, MGP Ingredients (NASDAQ:MGPI) is a leading supplier of high-quality ingredients to the food and beverage industry
Why Does MGPI Give Us Pause?
At $42.01 per share, MGP Ingredients trades at 7.7x forward price-to-earnings. Check out our free in-depth research report to learn more about why MGPI doesn’t pass our bar.
Market Cap: $888.9 million
Industry Segment: Shelf-Stable Food
Committed to clean-label foods, SunOpta (NASDAQ:STKL) is a sustainability-focused food and beverage company specializing in the sourcing, processing, and packaging of organic products.
Why Are We Cautious About STKL?
SunOpta is trading at $7.51 per share, or 37x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than STKL.
With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.
Put yourself in the driver’s seat by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,704% between September 2019 and September 2024) as well as under-the-radar businesses like Axon (+604% five-year return). Find your next big winner with StockStory today for free.
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