During market complexities and low points where consumers try to restrain their extra spending, a demand surge is observed towards consumer staples, resulting in bright prospects for the consumer staples market. Amid this, investors trying to avoid high risks could also turn to consumer staple stocks as their defensive strategy.
Given the industry’s bright prospects, it could be wise to buy fundamentally sound consumer staples stocks PepsiCo, Inc. (PEP), Philip Morris International Inc. (PM), and Kimberly-Clark Corporation (KMB) with massive growth potential.
Despite numerous market downturns and uncertainties, certain industries and segments remain unaffected mostly and sometimes even thrive in such situations. Companies operating in the consumer staples industry and delivering products of essential or necessary nature generally fall in this category. Their inelastic demand keeps them resilient and growing.
Stocks of consumer staples companies also act as defensive investments and offer investors favorable opportunities and long-term growth during economic volatility. During the past year, S&P 500 Consumer Staples exhibited impressive performance at a rate of 12.5%.
Further, the staple market is expected to grow from $229.21 billion in 2025 to $335.44 billion by 2034, exhibiting growth at a CAGR of 4.3%. The market growth is attributable to factors like increased demand for essential consumer goods and industrial products and the evolving trends around sustainability and eco-friendly materials.
Hence, around the lingering market uncertainties due to Trump’s unclear policy frameworks and clouded prospects on interest rate cuts, turning to defensive investing is suitable. Therefore, investors could consider fundamentally sound consumer staples stocks PEP, PM, and KMB for defensive investing.
PepsiCo, Inc. (PEP)
PEP is engaged in the manufacture, marketing, distribution, and sale of various beverages and convenient foods worldwide. The company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East and South Asia; and Asia Pacific, Australia and New Zealand and China Region.
On January 17, 2025, PEP completed the acquisition of Garza Food Ventures LLC, dba Siete Foods, for $1.2 billion. With the acquisition of Siete, PEP will further expand its portfolio of products, emphasizing nutritious, simple foods and ingredients and serving wider audiences.
Also, on November 22, 2024, PEP acquired the remaining 50% interest in Sabra Dipping Company, LLC and PepsiCo-Strauss Fresh Dips & Spreads International GmbH. After the agreement, PEP became the sole owner of the companies. The acquisition expanded PEP’s positive choice portfolio and accelerated innovation in refrigerated fresh dips and spreads.
For the third quarter that ended September 7, 2024, PEP reported net revenue of $23.32 billion. Its gross profit increased 1.1% from the year-ago value to $12.92 billion. The company’s net income attributable to PepsiCo amounted to $2.93 billion and $2.13 per common share for the quarter.
In addition, as of September 7, 2024, the company’s cash and cash equivalents and total assets stood at $7.31 billion and $100.51 billion.
Analysts expect PEP’s revenue and EPS for the fourth quarter (ended December 2024) to increase marginally and 9.1% year-over-year to $27.89 billion and $1.94, respectively. Further, the company has topped consensus EPS estimates in all four trailing quarters, which is impressive.
Shares of PEP have plunged 0.9% over the past month to close the last trading session at $150.69.
PEP’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has an A grade for Quality and a B for Growth. PEP is ranked #11 out of 31 stocks in the B-rated Beverages industry.
To check POWR Ratings of PEP for Value, Momentum, Stability, and Sentiment, click here.
Philip Morris International Inc. (PM)
PM operates as a tobacco company working to deliver a smoke-free future and evolving its portfolio for the long term to include products outside of the tobacco and nicotine sectors. Its product portfolio includes cigarettes and smoke-free products, including heat-not-burn, vapor, and oral nicotine products, primarily under the IQOS and ZYN brands.
On December 12, 2024, PM declared a regular quarterly dividend of $1.35 per common share, which was paid on January 13, 2025, to shareholders of record as of December 26, 2024.
PM pays an annual dividend of $5.40, which translates to a yield of 4.15% at the current share price. Its four-year average dividend yield is 5.09%. Moreover, the company’s dividend payouts have increased at a CAGR of 2.8% over the past five years. Philip has raised its dividends for 16 consecutive years.
PM’s net revenue increased 8.4% year-over-year to $9.91 billion during the third quarter that ended September 30, 2024. Its adjusted operating income rose by 11.2% year-over-year to $4.15 billion. The company’s net earnings came in at $3.21 billion or $1.97 per share, up 48.1% and 49.2% from the prior year’s quarter, respectively.
Street expects PM’s revenue for the fourth quarter (ended December 2024) to increase 4.3% year-over-year to $9.44 billion. Its EPS for the same period is expected to increase 10.2% year-over-year to $1.50. Moreover, the company topped consensus revenue estimates in all of the four trailing quarters.
PM’s stock has gained 13.1% over the past six months and 43.3% over the past year to close the last trading session at $130.20.
PM’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Quality and Stability. Within the B-rated Tobacco industry, PM is ranked #2 of 9 stocks.
Click here to access additional PM ratings for Growth, Value, Momentum, and Sentiment.
Kimberly-Clark Corporation (KMB)
KMB manufactures and markets personal care and consumer tissue products. It operates in three segments: Personal Care; Consumer Tissue; and K-C Professional. It provides products like disposable diapers, training and youth pants, swim pants, and baby wipes under the Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Sweety, Kotex, U by Kotex and Intimus brands.
On December 26, 2024, KMB fuelled its digital transformation through the Global Digital Technology Center in Bengaluru, India. Established with an initial investment of $2.50 million, GDTC emphasizes key areas and digital capabilities such as Data and Analytics, Artificial Intelligence (AI), including Generative AI, Machine Learning (ML), Cloud Transformation, and more.
The Bengaluru GDTC will fuel expansion, advance AI/ML capabilities, and develop innovative digital solutions to boost operational efficiency and customer engagement, contributing to India's broader tech and innovation ecosystem.
During the fourth quarter that ended December 31, 2024, KMB reported net sales of $4.93 billion, and its adjusted gross profit was $1.74 billion, up marginally from the prior year’s quarter. The company’s adjusted operating profit rose 2.1% from the year-ago value to $684 million.
Additionally, net income attributable to KMB came in at $447 million, or $1.34 per share for the quarter, respectively.
Analysts expect KMB’s revenue and EPS for the fiscal year (ending December 2026) to increase 2.4% and 5.5% year-over-year to $20 billion and $7.94, respectively. Also, the company surpassed the consensus EPS estimates in three of the trailing four quarters.
Over the past year, the stock has gained 7.4% to close the last trading session at $129.97.
KMB’s POWR Ratings reflect its bright prospects. The stock has an overall B rating, translating to a Buy in our proprietary rating system.
KMB has a B grade for Value and Quality. It is ranked #15 among 55 stocks within the Consumer Goods industry.
To see the other ratings of KMB for Sentiment, Growth, Momentum, and Stability, click here.
What To Do Next?
Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:
3 Stocks to DOUBLE This Year >
PEP shares were trading at $150.70 per share on Monday afternoon, up $0.01 (+0.01%). Year-to-date, PEP has declined -0.89%, versus a 1.82% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
3 Consumer Staples Stocks for Defensive Investing StockNews.com
