Top 3 Consumer Staples Stock Picks for the New Year

Stocks to buy

People buy consumer goods in any economy. These are among the last expenses people cut after minimizing how much they spend on luxury items and non-essentials. 

Consumer staples stocks don’t outperform growth stocks during bullish markets. However, these same stocks offer stability and less volatility during bearish market cycles. Many of these stocks also deliver high dividends that they grow each year.

Companies selling consumer staples each have resources many people don’t want to live without. However, some stocks are growing faster than others and offer better value for your money. These are some of the top consumer staples stocks to consider.

Costco (COST)

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Costco (NASDAQ:COST) has 871 warehouses worldwide with approximately 600 locations in the United States and Puerto Rico. The company uses an annual membership program to generate steady revenue and offers discounts on various products. 

People turn to Costco to save money while getting a quality experience. Over 72 million households use Costco including 129.5 million cardholders. The average warehouse is 147,000 square feet which offers plenty of space to sell a wide range of products.

Costco has a low dividend yield of 0.60% but does a good job at raising its dividend by over 10% each year. The firm has healthy profits and showed off its financial flexibility with a special $15 dividend. Costco’s quarterly dividend payment is normally $1.02 per share. 

Costco has been an exceptional long-term stock in the consumer staples industry. Shares are up by 48% year-to-date and have soared by 232% over the past five years.

Walmart (WMT)

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Walmart (NYSE:WMT) is the biggest retailer in the world by revenue and has approximately 10,500 stores and clubs in 19 countries. The company embraces “Every Day Low Price” as its core pillar which helps the company attract customers in any economy.

People always want a good deal, and it becomes especially important during economic slowdowns. Walmart has built brand recognition and customer loyalty since the first Walmart store opened in Rogers, Arkansas, in 1962. 

Walmart stock has a 1.50% dividend yield and has generated steady gains for investors. Shares are up by 9% year-to-date and have rallied by 70% over the past five years. The company’s 22 forward P/E ratio and good financials make it less vulnerable to a downturn.

The company grew revenue by 5.2% year-over-year in the third quarter and more than doubled its net income year-over-year. Walmart has been successfully expanding into e-commerce. That segment experienced 15% year-over-year growth globally. 

Celsius (CELH)

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Celsius (NASDAQ:CELH) is the hottest sports beverage on the block. Many consumers can’t get enough of these drinks and frequently buy them. The company’s rapid penetration in the sports beverage industry helped the company generate a 49% year-to-date gain. The long-term performance is far more impressive as shares have gained 4,250% over the past five years.

Celsius reported 104% year-over-year revenue growth in the third quarter and is beginning its international expansion. The company currently has very limited exposure to that market, but a partnership with Pepsi (NYSE:PEP) can lead to quick momentum and make high revenue growth sustainable for a few more years. 

Analysts feel confident about Celsius’ long-term prospects. The stock has a “Strong Buy” rating from 14 analysts and an average price target of $72.12 per share. This price target implies a 44% upside for CELH investors. The company is also posting impressive net income growth which can lead to a more reasonable P/E ratio in the future. 

On this date of publication, Marc Guberti held a long position in CELH. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.

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