The consumer goods market, which encompasses items of necessity and daily use like food, household goods, and personal care products, has inelastic demand owing to its nature. This leads to steady sales through market uncertainties, price fluctuations, and recent developments in technology and innovation; the market has more robust growth prospects.
Against this backdrop, it could be wise to invest in sound low-beta consumer goods stocks Colgate-Palmolive Company (CL), Kimberly-Clark Corporation (KMB), and Ennis, Inc. (EBF) for a stable portfolio.
With signs of easing inflation pressures and a slightly improving employment market, consumer spending grew much better than the 0.3% estimate. The Commerce Department reported consumer spending grew strongly as advanced retail sales accelerated 1% in the month.
Further, compared to the previous quarter, consumer spending in the US grew to $15.75 trillion in the second quarter of 2024, which was $15.64 trillion in the first quarter of 2024. This also marked an all-time high from the first quarter of 1950.
The consumer goods market is highly adaptable and quickly adapts to changing consumer trends and demand, poising it for continued growth. The global consumer goods sector is expected to increase to $224.33 billion by 2032, exhibiting growth at a CAGR of 7.8%. The market is driven by digital innovation, the impacts of COVID-19, and a focus on healthy and sustainable lifestyles.
Further, investors can consider low-beta stocks as safe haven investment alternatives during periods of heightened market uncertainty. Low-beta stocks are those whose beta is below 1.00, translating to a lower price movement than the broad-market indices. Hence, their low volatility and high return potential can benefit investors.
Considering the encouraging economic trends, let’s delve into the fundamentals of the top three Consumer Goods stocks, beginning with the third choice.
Stock #3: Colgate-Palmolive Company (CL)
CL manufactures and sells consumer products internationally. The company operates through two segments: Oral, Personal and Home Care; and Pet Nutrition. The company offers products like toothpaste, toothbrushes, mouthwash, bar and liquid hand soaps, shower gels, shampoos, conditioners, deodorants, and antiperspirants.
On June 13, CL’s Board of Directors declared a quarterly cash dividend of $0.50 per common share, paid on August 15, 2024, to shareholders of record on July 19, 2024.
CL pays an annual dividend of $2, which translates to a yield of 1.86% at the current share price. Its four-year average dividend yield is 2.32%. Moreover, the company’s dividend payouts have increased at a CAGR of 3.3% over the past three years. CL has raised its dividends for 60 consecutive years.
CL’s trailing-12-month gross profit margin and EBIT margin of 59.70% and 21.20% are 66.8% and 122.9% higher than the industry average of 35.79% and 9.51%, respectively. Its trailing-12-month net income margin of 14.21% is considerably higher than the industry average of 4.28%.
During the second quarter that ended June 30, 2024, CL’s net sales increased 4.9% year-over-year to $5.06 billion. Its non-GAAP operating profit grew 12.7% from the year-ago quarter to $1.12 billion. Non-GAAP net income attributable to CL came in at $753 million or $0.91 per share, up 16.9% and 18.2% from the prior-year quarter, respectively.
Analysts expect CL’s revenue and EPS for the third quarter (ending September 2024) to grow 2% and 2.8% year-over-year to $5.01 billion and $0.88, respectively. Also, the company topped the consensus revenue and EPS estimates in all of the four trailing quarters.
Shares of CL have surged 24.1% over the past six months and 48.1% over the past year to close the last trading session at $107.78. It has a beta of 0.40.
CL’s solid 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 POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
CL has an A grade for Quality and a B grade for Sentiment and Stability. It is ranked #17 out of 52 stocks in the A-rated Consumer Goods industry.
In addition to the POWR Ratings we’ve stated above, we also have CL ratings for Value, Growth, and Momentum. Get all CL ratings here.
Stock #2: 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. The company offers its products under brands like Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Sweety, Kotex, U by Kotex, Intimus, Thinx, Poise, Depend, Plenitud, and Softex.
On June 26, KMB launched the new Kimtech™ Polaris™ Nitrile Exam Gloves for use in laboratory settings. The gloves offer the highest level of protection, durability, strength, and comfort compared to any other previous Kimtech gloves.
Kimtech Polaris offers measurable ergonomic benefits by improving comfort and fit and minimizing the risk factors. The gloves are specifically designed to protect professionals in laboratory settings and are also suitable for industrial work environments, pharmaceutical manufacturing, medical device manufacturing, and biotechnology.
On May 7, KMB’s Huggies launched the Skin Essentials diaper featuring the new, proprietary SkinProtect liner technology, which leaves behind up to 5x less mess than ordinary diapers and helps protect baby's skin against the top two causes of rash.
The full Huggies® Skin Essentials™ collection includes Huggies® Skin Essentials™ Diapers, Huggies® Skin Essentials™ Wipes, and Pull-Ups® Skin Essentials™ Training Pants.
For the second quarter that ended June 30, 2024, KMB posted net sales of $5.03 billion. Its adjusted gross profit grew 6.2% from the year-ago value to $1.86 billion. The company’s total operating profit of $655 million indicates growth of 479.6% year-over-year.
Furthermore, adjusted net income attributable to KMB and adjusted EPS were $661 million and $1.96, reflecting increases of 18.2% and 18.8% from the prior year’s quarter, respectively.
Based on the first-half results, KMB has updated its 2024 outlook. Its organic net sales are expected to grow at a mid-single-digit rate in confirmation with the prior outlook, whereas its adjusted operating profit is now expected to grow at a mid-to-high teen percentage rate.
Street expects KMB’s revenue for the fourth quarter (ending December 2024) to increase 0.5% year-over-year to $5 billion, while its EPS is expected to grow 6.2% year-over-year to $1.60, respectively. Furthermore, the company surpassed the consensus EPS estimates in three of the trailing four quarters.
KMB’s stock has gained 19.3% over the past six months and 16% over the past year to close the last trading session at $147.35. It has a beta of 0.40.
KMB’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has a B grade for Quality and Value. KMB is ranked #11 among 52 stocks in the Consumer Goods industry.
Click here to access other ratings of KMB for Momentum, Growth, Stability and Sentiment.
Stock #1: Ennis, Inc. (EBF)
EBF manufactures and sells business forms and other business products. The company offers snap sets, continuous forms, laser cut sheets, tags, labels, envelopes, integrated products, jumbo rolls, and pressure-sensitive products under the brands including Ennis, Royal Business Forms, Block Graphics, 360º Custom Labels, and ColorWorx brands.
On June 27, EBF acquired Printing Technologies, Inc., located in Indianapolis, IN. The strategic acquisitions bode well with the company. PTI is a renowned brand that has diverse products that enhance EBF's capabilities and broaden its product offerings.
On June 14, EBF’s Board of Directors declared a quarterly cash dividend of $0.25 per share on the company’s common stock. The dividend was paid on August 5, 2024, to shareholders of record on July 5, 2024.
EBF pays an annual dividend of $1, which translates to a yield of 4.18% at the current share price. Its four-year average dividend yield is 4.85%. Moreover, the company’s dividend payouts have increased at a CAGR of 2.6% over the past three years.
EBF reported net sales of $103.11 million during the first quarter that ended May 31, 2024, and its gross profit was $30.90 million. The company’s net earnings came in at $10.69 million and $0.41 per share for the quarter, respectively.
Furthermore, the company’s total assets stood at $406.17 million as of May 31, 2024, compared to $399.19 million as of February 29, 2024.
Street expects EBF’s revenue for the fourth quarter (ending February 2025) to increase 0.6% year-over-year to $98 million, and its EPS for the same quarter is expected to be $0.39. EBF’s stock has gained 17.1% over the past six months and 9.7% over the past year to close the last trading session at $23.45. The stock has a beta of 0.39.
EBF’s POWR Ratings reflect its robust outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The stock has an A grade for Quality. It also has a B grade for Sentiment and Stability. Within the same industry, EBF is ranked #3 among 52 stocks.
Click here to access additional ratings of EBF for Momentum, Growth, and Value.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
CL shares were trading at $108.36 per share on Wednesday afternoon, up $0.58 (+0.54%). Year-to-date, CL has gained 38.25%, versus a 16.66% 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 Stocks to Buy With a Low Beta for a Calm Portfolio StockNews.com
