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5 Consumer Staples Stocks to Protect Your Portfolio from Stagflation

By Sweta Vijayan

After an economic slowdown in the first quarter, the chances of the economy witnessing a further decline has increased with surging inflation. The consumer price index rose 8.3% year-over-year in April, beating the 8.1% estimate. Since this indicates a more hawkish Fed going forward, many analysts fear the economy will slip into recession because of uncomfortably high interest rates.

Therefore, the consumer staples sector could be one of the best investments now. The almost inelastic demand of products in this sector allows it to perform steadily in all business cycles. Investors’ interest in consumer staples stocks is evident in the First Trust Consumer Staples AlphaDEX ETF’s (FXG) 12.5% returns year-to-date versus the SPDR S&P 500 Trust ETF’s (SPY) 11.5% loss.

Therefore, we think it could be wise to bet on fundamentally sound consumer staples stocks Sysco Corporation (SYY), Keurig Dr Pepper Inc. (KDP), The Hershey Company (HSY), Procter & Gamble Company (PG), and Albertsons Companies, Inc. (ACI) to protect one’s portfolio from stagflation.

Sysco Corporation (SYY)

SYY in Huston, Tex., markets and distributes a range of food and related products primarily to restaurants, healthcare, and educational facilities. The company operates through U.S. Foodservice Operations; International Foodservice Operations; SYGMA; and Other segments. It also distributes personal care guest amenities, housekeeping supplies, room accessories, and textiles to the lodging industry.

SYY will pay a $0.49 quarterly cash dividend on July 1, 2022. The stock pays a $1.96 per share dividend annually, translating to a 2.33% yield. The company’s dividend has grown at a 7.99% rate over the past five years. SYY has increased its dividends for 25 consecutive years.

On Feb. 14, 2022, SYY acquired The Coastal Companies, a leading fresh produce distributor and value-added processor that will operate as part of SYY’s FreshPoint specialty produce business. The acquisition should help FreshPoint enhance its service to the important Mid-Atlantic region, and strategically diversify its portfolio by adding retail and ready-to-eat capabilities and state-of-the-art facilities with growth capacity.

SYY’s sales for its fiscal 2022 third quarter, ended April 2, 2022, increased 42.9% year-over-year to $16.90 billion. The company’s non-GAAP gross profit came in at $2.89 billion, representing a 43.4% year-over-year improvement. Its non-GAAP operating income came in at $575.43 million for the quarter, indicating a 124.6% rise from the prior-year period. SYY’s non-GAAP net earnings were $362.91 million, up 216.1% from the year-ago period. Its non-GAAP EPS increased 222.7% year-over-year to $0.71. The company had $876.14 million in cash and cash equivalents as of April 2, 2022.

Analysts expect SYY’s EPS to grow 113.9% year-over-year to $3.08 for its fiscal year 2022, ending June 30, 2022. It surpassed the Street’s revenue estimates in three of the trailing four quarters. The $65.89 billion consensus revenue estimate for the same fiscal year represents a 28.5% rise from the prior-year period. The company’s EPS is expected to grow at a 51.2% rate per annum over the next five years. Over the past nine months, the stock has gained 7.6% in price and closed yesterday’s trading session at $84.06.

SYY’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

It has an A grade for Growth and a B grade for Value and Sentiment. Click here to see the additional ratings for SYY’s Stability, Quality, and Momentum.

SYY is ranked #7 of 87 stocks in the B-rated Food Makers industry.

Keurig Dr Pepper Inc. (KDP)

KDP in Plano, Tex., manufactures flavored (non-cola) carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs), including water, ready-to-drink tea and coffee, juice, juice drinks, mixers, and specialty coffee, and is a producer of single-serve brewing systems worldwide. The company distributes its products to retailers, bottlers and distributors, restaurants, hotel chains, office coffee distributors, and end-use consumers.

KDP paid a $0.19 quarterly cash dividend on April 15, 2022. The stock pays a $0.75 per share dividend annually, translating to a 2% yield.

On July 27, 2021, KDP introduced BrewID, a next-generation technology platform that gives consumers a perfectly customized, rich, full-flavored coffee. BrewID, which is being launched with ACI’s K-Supreme Plus SMART brewer, has technology that recognizes the specific brand and roast of the K-Cup pod and automatically customizes the brew settings. ACI expects to witness high demand for this product in the coming months.

For its fiscal 2021 first quarter, ended March 31, 2022, KDP’S total revenue increased 6.8% year-over-year to $3.08 billion. The company’s adjusted gross profit came in at $1.62 billion, up 0.8% from the prior-year period. Its adjusted net income was  $474 million for the quarter, representing a 0.7% year-over-year improvement. KDP’s adjusted EPS remains unchanged from the year-ago period at $0.33. The company had $592 million in cash and equivalents as of March 31, 2022.

Analysts expect the company’s EPS to hit $1.69 for its fiscal year 2022, ending Dec.31, 2022, representing a 5.6% rise from the prior-year period. It surpassed the Street’s EPS estimates in three of the trailing four quarters. The $13.70 billion consensus revenue estimate for the same fiscal year represents an 8% year-over-year improvement. Its EPS is expected to grow at a  7.1% rate per annum over the next five years. Over the past nine months, the stock has gained 8% and closed yesterday’s trading session at $37.42.

KDP's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.

It has a B grade for Stability and Quality. Click here to see the additional ratings for KDP (Sentiment, Momentum, Value, and Growth).

KDP is ranked #17 of 36 stocks in the A-rated Beverages industry.

Hershey Company (HSY)

Hershey, Pa.-based HSY produces chocolate and sugar confectionery products, gum and mint refreshment products, and pantry items through its North America Confectionery; North America Salty Snacks; and International segments. It sells its products to wholesale distributors, chain grocery stores, mass merchandisers, chain drug stores, vending companies, wholesale clubs, convenience stores, dollar stores, concessionaires, and department stores.

HSY will pay a $0.90 quarterly cash dividend on June 15, 2022. The stock pays a $3.60 per share dividend annually, translating to a 1.60% yield. The company’s dividend has grown at a 7.55% rate over the past five years. HSY has increased its dividends for 30 consecutive years.

On December 14, 2021, HSY completed its acquisition of Dot's Pretzels LLC and its co-manufacturer Pretzels Inc., for $1.2 billion. The acquisition accelerates HSY’s snacking powerhouse vision and brings the pretzel manufacturing capability in-house to ensure the continued growth of Dot's and expertise to drive future snacking innovations.

For its fiscal 2021 full year, ended March 31, 2022, HSY’s net sales increased 16.1% year-over-year to $2.67 billion. The company’s non-GAAP gross profit was $1.22 billion, indicating a 16.3% rise from the prior-year period. Its non-GAAP operating profit came in at $707.89 million for the quarter, up 27.4% from the prior-year period. HSY’s non-GAAP net income was  $523.47 million, representing a 30.7% rise from the prior-year period. Its non-GAAP EPS came in at $2.53, indicating a 31.8% year-over-year improvement. The company had $338.06 million in cash and cash equivalents as of April 3, 2022.

Analysts expect the stock’s EPS to improve 12% year-over-year to $8.05 for its fiscal 2022, ending Dec. 31, 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters, which is impressive. The $9.97 billion consensus revenue estimate for the same fiscal year represents an 11.2% rise from the prior-year period. Its EPS is expected to grow at a 9.5% rate per annum over the next five years. Over the past nine months, the stock has gained 25.7% in price to close yesterday’s trading session at $224.63.

HSY’s POWR Ratings reflect its solid prospects. The stock has an overall B rating, which equates to Buy in our proprietary rating system.

It has a B grade for Growth, Sentiment, and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for HSY’s Stability, Value, and Momentum here.

HSY is ranked #19 in the Food Makers industry.

The Procter & Gamble Company (PG)

Founded in 1837, PG in Cincinnati, Ohio, provides branded consumer packaged goods to consumers worldwide. The company operates in five segments—beauty; grooming; health care; fabric & home care; and baby, feminine & family care. Its products are sold through mass merchandisers, e-commerce, grocery stores, membership club stores, drug stores, and department stores.

PG will pay a $0.91 quarterly cash dividend on May 16, 2022. The stock pays a $3.65 per share dividend annually, translating to a 2.39% yield. The company’s dividend has grown at a 5.48% rate over the past five years. HSY has increased its dividends for 66 consecutive years.

For its fiscal year 2022 third quarter, ended March 31, 2022, PG’s net sales increased 7% year-over-year to $19.38 billion. The company’s operating income was $4.02 billion for the quarter, indicating a 6.3% year-over-year improvement. Its net earnings came in at $3.37 billion, up 3.6% from the prior-year period. PG’s EPS increased 5.6% year-over-year to $1.33. As of March 31, 2022, the company had $8.53 billion in cash and cash equivalents.

The $5.84 consensus EPS estimate for its fiscal year 2022 fourth-quarter, ending June 30, 2022, represents a 3.2% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters, which is impressive. Analysts expect the stock’s revenue to improve 5.3% year-over-year to $80.17 billion for the same fiscal year. The company’s EPS is expected to grow at a 6.1% rate per annum over the next five years. Over the past nine months, the stock has gained 7% and ended yesterday’s trading session at $152.61.

PG’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.

The stock has a B grade for Quality and Stability. Click here to see the additional ratings for PG (Growth, Value, Sentiment, and Momentum).

The stock is ranked #10 of 61 stocks in the Consumer Goods industry.

Albertsons Companies, Inc. (ACI)

ACI in Boise, Idaho, operates as a food and drug retailer that offers grocery products, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services through its stores and various digital platforms. As of February 27, 2021, it operated 2,277 stores under various banners.

ACI paid a $0.12 quarterly cash dividend on May 10, 2022. The stock pays a $0.46 per share dividend annually, translating to a 1.61% yield.

On May 3, 2022, ACI and Uber Technologies, Inc. (UBER), a mobility as a service provider, expanded their partnership to include more than 2,000 of ACI’s banner stores nationwide, including Albertsons, Safeway, Jewel-Osco, ACME, Tom Thumb, Randalls and more through UBER’s UberEats online food ordering and delivery platform. Despite being found within Uber Eats' grocery category, consumers can order items through 'express' lanes within the convenience section of the app. This will enable ACI to serve more people and benefit.

For its fiscal 2021 fourth quarter, ended Feb. 26, 2022, ACI’s net sales and other revenue increased 10.2% year-over-year to $17.38 billion. The company’s gross profit came in at $4.98 billion, representing a 9.3% increase from the prior-year period. Its operating income came in at $664.30 million, compared to a $174.80 million loss in the year-ago period. ACI’s adjusted net income came in at $436.80 million, representing a 25.8% rise from the prior-year period. Its adjusted EPS of $0.75 for the quarter indicates a 25% year-over-year improvement. And as of February 26, 2022, the company had $2.90 billion in cash and cash equivalents.

Analysts expect the company’s revenue to hit $74.58 billion for its fiscal year 2022, ending Feb. 28, 2023, representing a 3.7% rise from the prior-year period. It surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive. The company’s EPS is expected to be a marginal rate per annum over the next five years. Over the past nine months, the stock has gained 4.5% in price and closed yesterday’s trading session at $29.85.

ACI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.

It has an A grade for Growth and a B grade for Value and Quality. Click here to see the additional ratings for ACI (Sentiment, Momentum, and Stability).

ACI is ranked #1 of 38 stocks in the A-rated Grocery/Big Box Retailers industry.

Note that ACI is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.


SYY shares were trading at $82.03 per share on Thursday afternoon, down $2.03 (-2.41%). Year-to-date, SYY has gained 5.64%, versus a -18.37% rise in the benchmark S&P 500 index during the same period.



About the Author: Sweta Vijayan


Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.

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