Consumer staples stocks are a traditional safe haven from uncertainty, which has already proven to be more than abundant in 2022.
On one hand, many folks are increasingly worried about inflation. Indeed, the consumer price index climbed 7% in 2021, the largest 12-month increase in four decades. At the same time, global supply chain issues continue to remain a big concern.
Yet at the same time, the 2021 holiday shopping season was the best on record. The National Retail Federation said sales during November and December grew 14.1% to an all-time high of $886.7 billion.
There's admittedly a lot of uncertainty when it comes to consumer spending right now. However, consumer staples are one segment of the stock market that tends to be insulated from the broader challenges that face furniture retailers, restaurants, auto dealers or other operators. While sometimes boring in their business model, these steady stocks can provide a strong foundation for any portfolio.
Here, we examine 12 of the best consumer staples stocks for 2022. Most of these offer up some level of defense, which is typical of the sector – though a few have the potential to surprise as growth plays for the new year.
Share prices and market data as of March 10. Analysts' estimates and recommendations as of Dec. 2. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Companies are in reverse order of analysts' consensus ratings. Stock ratings provided by S&P Global Market Intelligence.
- Market value: $16.9 billion
- Dividend yield: 1.4%
- Analysts' ratings: 5 Strong Buy, 4 Buy, 9 Hold, 1 Sell, 1 Strong Sell
- Analysts' consensus recommendation: 2.45 (Buy)
Investors may think Albertsons Companies (ACI (opens in new tab), $34.58) is little more than a sleepy grocery store operator incapable of significant growth. But a look at share performance disproves this pretty clearly, with the stock up an impressive 73% in the last 12 months.
One catalyst was reports that the company hired former Best Buy (BBY (opens in new tab)) executive Sharon McCollam as its new chief financial officer, a C-suite veteran who knows a thing or two about digital transformation and modernization in the age of e-commerce competition.
And the fact that ACI conspicuously unveiled a new Deals & Delivery app and subscription-based offering soon after her hiring is proof positive that big things could be on the way.
It's also worth noting that while inflationary trends might bother some merchants, the reality is that food prices are rising faster than nearly any other spending category out there – and that gives grocers license to ratchet up prices in kind, protecting margins and thus the bottom line.
The huge rally in ACI is admittedly a bit of an anomaly. It isn't built on a ton of material improvement in the fundamentals of the business, as current fiscal year revenue is set to finish flat over the prior year.
But momentum matters – and momentum is decidedly on the side of this consumer staples stock.
- Market value: $102.5 billion
- Dividend yield: 2.2%
- Analysts' ratings: 9 Strong Buy, 6 Buy, 8 Hold, 1 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 2.04 (Buy)
Coronavirus-related shutdowns really hit global spirits conglomerate Diageo (DEO (opens in new tab), $178.24) hard in 2020. The $120-billion company behind liquor brands including Johnnie Walker whiskey, Smirnoff vodka, Captain Morgan rum and Tanqueray gin even went as far as to withdraw its full-year guidance due to the uncertainties.
But while investors were dealt some pretty big share-price declines in the early days of the pandemic, DEO stock had reclaimed its prior highs by the summer of 2021. And as bars and restaurants have slowly reopened, there has been good reason to give this once-battered consumer staples stock a second look.
Proof of this recovery comes most tangibly in the fact that Diageo expects organic net sales growth of at least 16% in the first half of its current fiscal 2022, according to recent forecasts.
This continued uptrend would be impressive enough, but the company just wrapped up its fiscal 2021 at the end of June with one of the highest reported growth rates in its history. That was driven in part because of "resilient consumer demand" and a replenishment of stocks by distributors who had to adjust to the new normal in 2020 amid food service shutdowns.
Whether you're personally into cocktails or not, the fact remains that alcohol is big business and DEO is one of the biggest brands out there in this segment. Given recent outperformance and sales momentum, it's a safe bet to presume it will be one of the best consumer staples stocks in 2022 as well.
- Market value: $47.1 billion
- Dividend yield: 1.9%
- Analysts' ratings: 7 Strong Buy, 3 Buy, 5 Hold, 1 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 2.00 (Buy)
Archer-Daniels-Midland (ADM (opens in new tab), $84.31) is perhaps one of the purest plays you'll find on the food-inflation trend.
Though headquartered in Chicago, this multinational crop conglomerate operates an impressive network of more than 300 processing plants and 450 crop procurement facilities. In short, ADM produces the raw grains, oils and other products used to make all manner of foodstuffs across all geographies.
ADM stock has outperformed the market so far in 2022, due in large part to analyst expectations that revenue will jump almost 30% this fiscal year on the back of rising food prices.
But there are other important developments going on to fuel future growth, including a key investment in agriculture technology company Farmers Business Network – a specialized e-commerce and digital finance platform tailor-made for the industry and currently valued at nearly $4 billion.
Let's not forget that one of the major appeals in consumer staples stocks is the income potential. And ADM offers a yield of 1.9%, well above the S&P 500's yield of 1.3%.
If that figure doesn't impress you, keep in mind it is sure to grow, given the company's 47 consecutive years of annual dividend increases. That gives you plenty of incentive to hang on for the future, whether or not food inflation is a short-term trend or not.
- Market value: $235.6 billion
- Dividend yield: 0.6%
- Analysts' ratings: 15 Strong Buy, 7 Buy, 10 Hold, 1 Sell, 1 Strong Sell
- Analysts' consensus recommendation: 2.00 (Buy)
A stalwart of retail space, Costco Wholesale (COST (opens in new tab), $532.72) has managed to thrive over the last decade even while margins were pinched razor thin for many of its grocery and consumer staples stocks competitors. And progress has been made even as e-commerce options disrupted the old ways of doing business.
Based on Costco's recent financial results, it is safe to say that this dominant brand will remain popular in 2022 with consumers and investors alike.
At a high level, investors should be cheered by the fact that COST just ended its fiscal year in September with net sales growth of almost 18%. And looking forward, fiscal 2022 is expected to bring an additional 10% increase in its top line, followed by another 8% or so the year after that.
That's a great long-term growth trend to see, but it's even better when you look at the specifics.
One major detail that stands out is that despite being a brick-and-mortar mainstay, Costco is capitalizing on e-commerce in a big way as its digital channel grew roughly 43% in fiscal 2021 – after a 50% year-over-year jump in fiscal 2020.
There are a lot of foundational reasons to own COST stock, including the fact that it rakes in $3.9 billion annually in membership dues alone and regularly gets top marks for customer satisfaction. But this e-commerce tailwind makes Costco more than just a staples play to hold for stability. It's not unreasonable to expect outperformance from COST stock in 2022, as well.
BJ's Wholesale Club Holdings
- Market value: $8.2 billion
- Dividend yield: N/A
- Analysts' ratings: 10 Strong Buy, 3 Buy, 9 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.95 (Buy)
BJ's Wholesale Club Holdings (BJ (opens in new tab), $60.23) is a warehouse retailer that offers everything from groceries to fuel to electronics through its 220 warehouse clubs and 150 gas locations across 17 states across the east coast.
At $8.5 billion in market value, it's not as large as other major discounters, but it has carved out a very profitable niche by catering to local customers in select markets.
The proof of that is in the numbers.
In November, BJ's third-quarter report showed revenue of $4.3 billion, up 14.3% from the same period last year. And when you get into the details, a big chunk of that was driven by a 7.7% increase in membership fees that hint at a new and significantly higher base to build on going forward. Sales growth is always good, but given that BJ's is built on a pay-to-shop membership network, the growth in this category shows it's getting more people through its doors on top of selling more items per person.
Other plusses: BJ's board authorized a $500 million stock buyback plan, and first-year membership renewal levels are at an all-time high.
Small wonder then, shares have surged more than 38% for the past 52 weeks. And investors of consumer staples stocks can likely bank on continued success in the new year.
- Market value: $252.2 billion
- Dividend yield: 3.1%
- Analysts' ratings: 11 Strong Buy, 6 Buy, 9 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.92 (Buy)
Coca-Cola (KO (opens in new tab), $57.88) is a blue-chip icon, with its massive scale and more than 120 years of operating history in the beverage industry.
While it's fair to say Coke isn't quite the force it once used to be given modern concerns about healthy eating, it's also fair to say this corporation is not a one-trick pony. KO has a wide array of brands including Smartwater, Vitaminwater, Minute Maid juices, Honest Tea and Fuze teas, Powerade energy drinks and a host of others.
Stability is typically top of mind for most investors of consumer staples stocks. As such, this diversified product portfolio offered at scale by a global powerhouse is incredibly appealing.
What's more, the company is tracking for more than 15% revenue growth in fiscal 2021, due in part to people returning to restaurants that serve Coke fountain products. It's also expected to see nearly 6% revenue growth next year according to Wall Street estimates, as it continues to offer new products and adapt to the latest consumer tastes.
And let's not forget one of the biggest appeals of all: The company recently approved its 60th consecutive annual dividend increase as it shows a long-term commitment to driving shareholder value through a steady income stream.
With a current yield of 3.1%, that's an added sweetener to investors in this soft drink giant.
Don't just take our word for it. The stock has long been a member of the Berkshire Hathaway portfolio, with Warren Buffett's holding company KO's largest shareholder.
- Market value: $395.6 billion
- Dividend yield: 1.6%
- Analysts' ratings: 21 Strong Buy, 7 Buy, 8 Hold, 1 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.70 (Buy)
When it comes to consumer staples stocks, it's hard to outdo Walmart (WMT (opens in new tab), $142.63). The $400-billion powerhouse retailer boasts more than 2 million employees and operates north of 11,000 stores in 26 countries.
And believe it or not, Walmart is only getting bigger based on its most recent earnings report. According to Q3 numbers, WMT posted a red-hot 9.2% growth rate in same-store sales compared with the prior year. While investors were expecting things to pick up as pandemic-related restrictions dropped off, few expected that kind of performance. Both revenue and earnings for the quarter topped Wall Street's expectations as a result.
Furthermore, Walmart is expecting robust holiday shopping in the fourth quarter, with stated expectations of about 5% same-store-sales growth in the U.S.
Skeptics that have been banging the drum on supply-chain disruptions won't have much room for criticism of WMT, either, given that the retailer purposefully allowed its inventories to grow by about 11% in Q3. This was in anticipation of unloading plenty of products to U.S. shoppers – particularly the ones who may not find those goods at other merchants.
And let's not forget that Walmart is fending off Amazon.com (AMZN (opens in new tab)) with brisk e-commerce growth. Last quarter, digital transactions rose 8% year-over-year – putting the channel up 87% in the last two years – to represent a significant share of its business.
Admittedly, WMT stock has underperformed over the past 12 months. However, with a big holiday season – and as the top discounter on the planet – it's always a bad strategy to bet against Walmart for the long term.
- Market value: $4.0 billion
- Dividend yield: N/A
- Analysts' ratings: 11 Strong Buy, 1 Buy, 2 Hold, 0 Sell, 1 Strong Sell
- Analysts' consensus recommendation: 1.60 (Buy)
Though some investors think about personal care products like toothpaste or foodstuffs like breakfast cereal when they consider consumer staples stocks, pet products are big business in this category as well. The American Pet Products Association estimates that last year nearly $104 billion was spent on pets – up from $97 billion in 2019 and $90 billion in 2018.
One of the most dynamic ways to invest in this big spending area is via Freshpet (FRPT (opens in new tab), $97.48), a high-growth company that has made a name for itself selling top-of-the-line meals and treats for our four-legged friends.
These are decidedly premium pet food products with all-natural chicken or beef as the top ingredients and no preservatives, making most require refrigeration. But just as American humans are more concerned with eating well than in years past, American pet owners are all too willing to splurge on FRPT products to keep their critters healthy and happy for many years to come.
Just look at the numbers: In Freshpet's third-quarter report that dropped in November, revenue was up about 28% year-over-year in the three-month period. And even despite supply-chain disruptions, the company significantly narrowed its loss compared with the prior year.
Admittedly, Wall Street reacted poorly to the fact that the company missed expectations. But shares are still up 146% in the last 36 months. And the recent rollback has created an opportunity to buy this consumer staples stock at a discount given its continued operational improvements and hopes that supply challenges of the last year will be a thing of the past in 2022.
- Market value: $3.5 billion
- Dividend yield: N/A
- Analysts' ratings: 5 Strong Buy, 1 Buy, 2 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.63 (Buy)
An upstart beverage company looking to wear away at some of the larger and more entrenched brands in the space, Celsius Holdings (CELH (opens in new tab), $49.56) offers healthy hydration options like flavored sparkling waters with no sugar and zero calories along with its Heat performance drink line meant to go toe-to-toe with bigger energy drink brands like Red Bull and Monster Beverage.
CELH has been making a name for itself on Wall Street thanks to impressive results lately. That continued again in November after the company posted red-hot revenue gains for its third quarter. Specifically, Celsius reported revenue of $94.9 million for the three-month period – up a jaw-dropping 157% over Q3 2020.
Admittedly there is still a lot of room to grow if Celsius wants to catch up to the dominant brands, but clearly it is intent on closing that gap.
The company did mention that it was facing some supply-chain problems, including getting enough aluminum for its cans, and that depressed its margins and profits,. However, it also said it added two new contracts with domestic can manufacturers to help support growth.
Over the last several years, consumer tastes have steadily moved away from sugary sodas and traditional coffees towards zero calorie seltzers and canned energy drinks. And for a long time, drinks like Red Bull and Monster Beverage have had this market mostly to themselves. However, CELH is ready to give these leaders a run for their money with products that are clearly connecting with what consumers want right now.
Spectrum Brands Holdings
- Market value: $3.6 billion
- Dividend yield: 2.0%
- Analysts' ratings: 6 Strong Buy, 2 Buy, 0 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.29 (Strong Buy)
A "home essentials" company, Spectrum Brands Holdings (SPB (opens in new tab), $85.30) offers an eclectic and diversified portfolio of items including Iams pet products, Remington personal care products, Black Flag pesticides and a mishmash of other products from weed killers to kitchen appliances like the iconic George Foreman grill.
Organic growth in this consumer staples conglomerate has typically been muted, and fiscal 2022 is only projecting about 6% revenue expansion. But earnings are set to accelerate much faster, particularly in the wake of a major September deal to sell its hardware and home improvement assets to a Swedish company in a deal pegged at $4.3 billion. Not only does this help streamline operations and focus SPB management on more related businesses, but the company also intends to use the proceeds to pay debt and find other complementary M&A targets.
Investors bid up the stock more than 15% in a single session in September on the news. Shares continued to respond after it reported strong fiscal Q4 results in November. That report included earnings that topped expectations, and a forecast "mid-to-high" single-digit sales growth even in the face of inflationary pressures. A spate of analyst upgrades followed.
With improving fundamentals and expectations of a stronger foundation after the recently announced deal closes, Spectrum looks like one of the best consumer staples stocks as we look ahead to 2022.
- Market value: $2.7 billion
- Dividend yield: N/A
- Analysts' ratings: 6 Strong Buy, 2 Buy, 0 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.25 (Strong Buy)
Based in Long Beach, California, Beauty Health (SKIN (opens in new tab), $18.32) designs and manufactures "aesthetic technologies." Or,as we used to call them, beauty and personal care products.
That's not to say SKIN offers the same old jars of cold cream your grandmother used. It specializes in sophisticated products including hydradermabrasion systems that cleanse, exfoliate and hydrate skin to keep it looking young and healthy.
And while some of the jargon may admittedly be a mouthful, it's not an exaggeration to say companies like Beauty Health have revolutionized what used to be a one-size-fits-all cosmetics industry that either gave you a short list of products or expected you to make a pricey trip to a dermatologist to meet your needs.
There is not a ton of extant information on this stock as it only went public in May through a special purpose acquisition company (SPAC).
That said, what we have seen numbers-wise is impressive. This includes a third-quarter financial report in early November that featured raised guidance, a big jump in gross margins and net sales for the first nine months of the year that were up more than 120% over the same period in 2020.
Particularly now that social distancing restrictions have eased in many areas and many consumers are eager to get back out in the world, beauty products are one category of consumer staples stocks that should see strong sales in 2022. And SKIN clearly has the wind at its back to capitalize on this trend.
Whole Earth Brands
- Market value: $361.2 million
- Dividend yield: N/A
- Analysts' ratings: 5 Strong Buy, 1 Buy, 0 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.17 (Strong Buy)
Many mainstream shoppers have never heard of Whole Earth Brands (FREE (opens in new tab), $9.04), a roughly $360 million company that offers low-calorie ingredients and natural sweets such as jams and chocolates.
But while some of its nameplates aren't very high profile, most diners will recognize the Equal nameplate – the sugar substitute found at just about every eatery and coffee shop.
In prior years, more than a third of total revenue at Whole Earth came from its flavors and ingredients segment as it sold products to other packaged foods and foodservice companies. However, in early 2021, it closed its acquisition with foods brand Wholesome Sweeteners, which currently offers the No. 1 organic sweetener brand in North America. That really kicked FREE stock up a notch, as did a separate 2020 acquisition of Swerve: a company producing sweeteners and baked goods with plant-based sweeteners to make them keto-friendly and free from traditional sugars.
It's hard to overstate the power of the healthy eating megatrend these days, but the numbers of Whole Earth hint at the potential here. In fiscal 2022, revenue is expected to jump nearly 10% based on brisk growth of these incorporated product lines. But more importantly, earnings are set to nearly triple thanks to the efficiencies gained by working these businesses together under one roof.
Though the smallest among the consumer staples stocks on this list, investors can still have confidence that FREE has a bright future. Its dominance of a fast-growing niche in the North American foods market is likely to continue paying off for years to come.
Jeff Reeves has covered finance and capital markets since 2008, contributing to outlets including CNBC, the Fox Business Network, the Wall Street Journal digital network, USA Today, US News & World Report and CNN Money.
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