I. Understanding Consumer Staples Stocks
Consumer staples are the everyday items that individuals buy, such as food and beverage, personal care items, and household goods. They are within the non-cyclical sector which gets its name due to its ability to hold up in both good and bad economic times. This sector is often recommended for conservative investors as it provides a steady influx of income regardless of the market conditions. For this August, we will explore two standout names that have shown great promise in an intriguingly tumultuous time.
II. The Top Two Consumer Staples Stocks
1. Procter & Gamble Co. (PG)
Procter & Gamble, a well-established name in the consumer goods sector, consistently features in the top ten consumer staples charts. Known for its varied portfolio of household brands, PG has a strong distribution network that spans the globe.
In this pandemic era where cleanliness and hygiene are of utmost importance, one can expect a growth in sales of PG’s products. The company’s Q4 earnings for the fiscal year 2021 reflect this, surpassing the expected figures. P&G reported a core EPS of $1.13, beating the Zacks Consensus Estimate of $1.09.
Already supplying an impressive dividend of 2.45%, its future looks promising given the increasing trend towards online sales and hygiene-focused consumer behavior. PG is a tempting choice for the investors willing to place their bets for August.
2. PepsiCo Inc. (PEP)
PepsiCo is another high-performer, consistently securing its spot on the top consumer staples charts. The company has expanded its portfolio beyond beverages to include snacks, nutrition products, and other food items.
The recent merge with Pioneer Foods, a leading food and beverage company in South Africa, puts PepsiCo on the map for greater diversification and an extended geographic reach. The Q2 2021 earnings forespeak a strong growth where total revenues summed up to $19.22 billion, exceeding the expectations by 6.8%.
Along with a notable dividend yield of 2.87%, the company’s investments in healthier snack and drink options align with the changing consumer preferences, making PEP an attractive consumer staples stock for August 2021.
III. Criteria for Selection
Stocks of Procter & Gamble and PepsiCo were selected based on their prominent position in the industry, impressive performance despite economic disturbances, and suitability to the market trends. Furthermore, their well-diversified product portfolios, strategic mergers or acquisitions, promising earnings data, and attractive dividend yields, along with their adaptability to the new normal, mark them out as tempting investments.
IV. Market Trends Fueling the Selected Stocks
Both P&G and PepsiCo are strategically aligned with the present market trends. The increased focus towards health, hygiene, and wellness drives the demand for their products. P&G’s dominance in the personal care and hygiene sector and PepsiCo’s shift towards healthier snacks and beverages meet this rising consumer trend. Their robust online presence and distribution networks support the accelerated shift towards e-commerce, making these two consumer staples stocks tempting bets for August.
V. Risks Involved
Like any investment, consumer staples stocks come with certain risks. The significant ones include heavy competition within the sector, fluctuating commodity prices, and substantial reliance on consumer behavior. However, P&G and PepsiCo’s strong brand presence, extensive distribution networks, and adaptive product portfolios mitigate these risks to a certain degree.
Investors considering these two consumer staples must be aware of the associated risks and the companies’ strategies against them to make an informed decision.
In the turbulent times of the ongoing pandemic, the two consumer staples stocks, Procter & Gamble and PepsiCo, emerge as safe and tempting bets for August. Their coherence with the prevailing market trends, robust financial performance, and promising future trajectory make them stand out in the top ten charts.
