The consumer staples industry, which includes essential goods like food, beverages, household items, and personal care products, tends to grow steadily due to its non-cyclical nature. Demand for these products remains consistent regardless of economic conditions, making the industry a cornerstone of stable investments.
Therefore, investors could consider buying consumer staple stocks Walmart Inc. (WMT), US Foods Holding Corp. (USFD), and PriceSmart, Inc. (PSMT).
Upcoming U.S. inflation data, expected to reveal persistent price pressures, could bolster the Federal Reserve's cautious stance on future interest rate cuts. The core Personal Consumption Expenditures (PCE) price index is anticipated to increase by 0.3% month-over-month in October and 2.8% year-over-year.
Moreover, the United States is a global leader in consumer products due to its advanced retail infrastructure, high disposable income levels, health trends, and large population. The staple market industry is projected to grow to $308.18 billion by 2032, exhibiting a CAGR of 4.3%.
In light of these encouraging trends, let’s look at the fundamentals of the three consumer staples stocks.
Walmart Inc. (WMT)
WMT engages in the operation of retail, wholesale, other units, and eCommerce worldwide. The company operates through three segments: Walmart U.S., Walmart International, and Sam's Club.
On October 8, 2024, WMT announced key expansions to its core pet care offerings, widening access to affordable in-person and virtual veterinary care, pet prescription delivery, grooming services, pet food, and supplies, all in one convenient experience for pet owners.
WMT’s trailing-12-month ROCE and ROTC of 12.30% and 10.09% are 18.2% and 44.7% higher than the industry average of 10.40% and 6.97%, respectively. Its trailing-12-month ROTA of 6.87% is 73.8% higher than the industry average of 3.95%.
For the third quarter ended October 31, 2024, WMT's total revenues increased 5.5% year-over-year to $169.59 billion. Its operating income grew 8.2% year-over-year to $6.71 billion. The company’s net earnings of $4.71 billion indicate growth of 633.1% year-over-year. Its net income per common share increased 850% year-over-year to $0.57.
Street expects WMT’s revenue for the fourth quarter (ending January 2025) to increase 4% year-over-year to $178.74 billion, while its EPS is expected to grow 6.6% year-over-year to $0.64 for the same period. Moreover, the company surpassed revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Over the past six months, WMT’s stock has gained 38.6% to close the last trading session at $90.44.
WMT’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
WMT has an A grade for Stability and Sentiment and a B in Momentum. It is ranked #13 out of 36 stocks in the A-rated Grocery/Big Box Retailers industry.
For additional WMT’s Growth, Quality, and Value, click here.
US Foods Holding Corp. (USFD)
USFD, together with its subsidiaries, engages in the marketing, sale, and distribution of fresh, frozen, and dry food and non-food products to food service customers in the United States.
USFD’s trailing-12-month ROCE and ROTC of 12.37% and 7.27% are 18.9% and 4.2% higher than the industry average of 10.40% and 6.97%, respectively. Its trailing-12-month ROTA of 4.27% is 8% higher than the industry average of 3.95%.
USFD’s net sales for the third quarter that ended September 28, 2024, increased 6.8% year-over-year to $9.73 billion. Its gross profit grew 8.1% from the year-ago quarter to $1.67 billion. Net income came in at $148 million and $0.61 per share, up 55.8% and 60.5% from the prior year’s quarter, respectively.
Analysts expect USFD’s revenue and EPS for the second quarter (ending December 2024) to increase 6% and 24.9% year-over-year to $9.47 billion and $0.80, respectively. Furthermore, the company has topped the consensus revenue estimates in each of the trailing four quarters, which is impressive.
Shares of USFD have surged 27% over the past six months and 62.1% over the past year to close the last trading session at $69.43.
USFD has an overall B rating, equating to a Buy in our proprietary rating system. USFD also has a B for Growth, Value, Stability, and Sentiment. It is ranked #5 out of 74 stocks in the B-rated Food Makers industry.
To see additional POWR Ratings for Momentum and Quality, click here.
PriceSmart, Inc. (PSMT)
PSMT owns and operates U.S.-style membership shopping warehouse clubs in the United States, Central America, the Caribbean, and Colombia. The company provides basic and private label consumable and non-consumable products under the Member's Selection brand, including groceries, cleaning supplies, health and beauty aids, meat, produce, deli, seafood, and poultry.
PSMT’s trailing-12-month asset turnover ratio of 2.44x is 184% higher than the 0.86x industry average. Its trailing-12-month CAPEX/Sales of 3.43% is 7.1% higher than the industry average of 3.20%.
In the fourth quarter that ended on August 31, 2024, PSMT’s total revenue increased 9.8% year-over-year to $1.23 billion. Its operating income stood at $49.21 million. The company’s net income and net income per share grew 89% and 91.8% year-over-year to $29.07 million and $0.94.
Analysts expect PSMT’s revenue and EPS for the fiscal first quarter (ended November 2024) to increase 6.3% and 9.7% year-over-year to $1.24 billion and $1.36, respectively. Also, the company has topped the consensus revenue estimate in each of the four trailing quarters, which is remarkable.
The stock gained 33.1% over the past year to close the last trading session at $89.96.
PSMT has an A grade for Growth and a B in Value, Momentum, and Stability. It is ranked #26 out of 36 stocks in the Grocery/Big Box Retailers industry.
Beyond what is stated above, we’ve also rated PSMT for Sentiment and Quality. Get all PSMT ratings here.
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WMT shares were trading at $89.68 per share on Monday afternoon, down $0.76 (-0.84%). Year-to-date, WMT has gained 72.31%, versus a 26.84% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
3 Consumer Staples Stocks to Buy for Safety and Growth StockNews.com
