Every week, Q.ai rounds up a list of stocks that fit into a particular theme, courtesy of our own artificial intelligence algorithms and Forbes AI Investor. And this week, we’re starting out right with a healthy portion of U.S. Consumer Staple Stocks.
Consumer staples are those products that consumers can’t – or won’t – go without. Categories include essential products such as food, beverages, pharmaceuticals, and hygienic items. On the less essential-to-life side, household goods, alcohol, and tobacco also count as consumer staples.
These companies are crucial not just to human life, but our economy, as well. While consumer staples may outperform (at least comparatively) during periods of economic downturn, they’re considered non-cyclical industries. In other words, they’re always in demand, regardless of economic and personal finance conditions.
As investments, consumer staples aren’t particularly thrilling – but that’s what makes them important to a well-diversified portfolio. These stocks usually offer steady dividends, low risk and volatility, and slow-but-robust performance even during recession. And while their earnings may not blow you away, they’re a great place to park your funds when you’re seeking long-term growth and a safe haven during economic downturn.
Q.ai runs daily factor models to get the most up-to-date reading on stocks and ETFs. Our deep-learning algorithms use Artificial Intelligence (AI) technology to provide an in-depth, intelligence-based look at a company – so you don’t have to do the digging yourself.
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The Hershey Company (HSY)
The Hershey Company – more commonly known as Hershey’s – nipped down 0.1% to $180.03 on Friday, closing out the day with 631k trades on the docket. The stock sits up 18.2% for the year and trades at 24.7x forward earnings.
Hershey’s is an American multinational that produces baked goods, sweet beverages, and raw baking products. And, of course, they’re one of the largest chocolate manufacturers in the world. Throughout the pandemic, this U.S. consumer staple performed well overall, though it did encounter some initial hiccups in the months after the market tanked.
But since January, Hershey’s has continued to climb to new 52-week highs time and again as post-pandemic buying and baking trends favor its bottom line. In its late July Q2 2021 earnings call, management credited its “robust recovery” to an increase in away-from-home consumption and sustained, elevated at-home consumption. All told, Hershey’s saw nearly $2 billion in sales during the quarter with a net income of $301.2 million, or $1.45 per diluted share.
Over the last three fiscal years, Hershey’s revenue leapt 11.5% to $8.15 billion compared to $7.79 billion in the three-year-ago period. Operating income, too, saw handsome growth of 18.6% from $1.73 billion to $1.8 billion. Meanwhile, EPS jumped over 23.3% to $6.11 compared to $5.58, although return on equity plunged from 100% to just 64%.
All told, Hershey’s forward 12-month revenue is expected to see minor growth around 0.6%. Our artificial intelligence rates this U.S. Consumer Staple stock A in Technicals, Growth, and Quality Value, with an F in Low Volatility Momentum.
Keurig Dr Pepper (KDP)
Keurig Dr Pepper slipped 0.2% Friday to $34.82 per share, closing out the day on the back of 2.5 million trades. The stock is trading within pennies of both its 10- and 22-day price averages. Currently, Keurig Dr Pepper trades up 8.8% for the year at 20.7x forward earnings.
Keurig Dr Pepper is a well-known American beverage conglomerate and the parent group of Dr Pepper Snapple Group. The company functions out of two primary divisions: east coast operations handle coffee, tea, and Keurig brewer sales, while the Texas division sells sodas, juices, and soft drinks.
Unlike some of its beverage-brewing peers, Keurig Dr Pepper saw very little growth during the pandemic – or in the two years before. The stock never regained its former glory following its overnight valuation plunge after the merger of Keurig Green Mountain with the Dr Pepper Snapple Group in mid-2018, though it has gained around $10 per share from its 2020 low. But that doesn’t mean it’s struggling overall – in its most recent quarterly report, Keurig Dr Pepper noted net sales of $3.14 billion compared to $2.86 billion YOY, with a net profit of $448 million.
In the last three fiscal years, Keurig Dr Pepper’s revenue soared from $7.4 billion to $11.6 billion, seeing total gains of 63.7%. Operating income saw even more explosive growth of 135%, rising from $1.36 billion to $2.89 billion, while per-share earnings saw a similar rise of 117% to 93 cents from just 53 cents. Meanwhile, return on equity climbed from 3.9% to 5.6%.
Looking forward, Keurig Dr Pepper is expected to see around 1.4% revenue growth in the next 12 months. At this time, our AI rates this U.S. Consumer Stock A in Technicals, Growth, and Quality Value, and F in Low Volatility Momentum.
Kellogg Company (K)
Kellogg Company – colloquially known as Kellogg’s – slipped 0.1% by Friday’s bell, closing out the day at $66.16 with 1.88 million trades on the docket. The stock remains up 6.3% for the year and now trades at 16.2x forward earnings.
Kellogg’s is an American multinational that manufactures and markets products such as cereals, snacks, and frozen breakfast items in over 180 countries. As a food-based U.S. consumer staple stock, you might expect Kellogg’s to have performed admirably during the pandemic – and for a few months, it did.
However, Kellogg’s stock plunged in late 2020 and early 2021 after analysts predicted that its pandemic-era performance and profits wouldn’t hold up in the new year. Somewhat ironically, these reports, alongside its own earnings announcements, sent the company’s stock spiraling downward to start 2021 on a low note. That said, since January, the company has regained some of its market cap – though its stock chart has marked some notable bumps along the way.
Kellogg’s three-year performance saw its revenue rise an incremental 3.6% to $13.77 billion compared to $13.55 billion, while operating income expanded over 7% from $1.8 billion to $1.85 billion. In the same period, per-share earnings slipped from $3.83 to $3.63 even as return on equity plunged from 50.2% to 36.4%.
Currently, Kellogg is expected to see around 1% revenue growth in the next year. Our artificial intelligence grades this U.S. Consumer Stock A in Technicals, Growth, and Quality Value, and F in Low Volatility Momentum.
Coca-Cola Consolidated, Inc (COKE)
Coca-Cola Consolidated, Inc jumped 1% Friday to $401 even, trading 25,611 shares in the session. This high-priced, low-volume stock is trending 54 cents below its 10-day price average, though it’s up over 50% this year. Currently, Coca-Cola Consolidated – not to be confused with Coca-Cola Co – trades at 12.9x forward earnings.
Coca-Cola Consolidated makes, sells, and distributes Coca-Cola products and other beverages in the southeast, Midwest, and mid-Atlantic United States. The company operates 13 manufacturing facilities and 80 distribution centers to serve a market of around 65 million people in 14 states.
Coca-Cola Consolidated’s stock saw a robust, if bumpy 2020 – but it was its affiliate’s Q1 2021 earnings report that shot the stock up nearly $120 in a month. When Coca-Cola Co. reported that quarterly sales had finally leapt back above pre-pandemic levels – with a higher profit margin and reduced expenses to boot – Coca-Cola Consolidated’s own stock leapt right along with it.
In the last three fiscal years, Coca-Cola Consolidated’s revenue jumped 14.8% from $4.62 billion to just over $5 billion. Operating income surged a whopping 651% from $55.4 million to $313 million in the same period. Meanwhile, per-share earnings positively skyrocketed from $2.13 to $18.30, while return on equity grew more than ten times over from 3.3% to 37.8%.
At this time, our AI grades Coca-Cola Consolidated, Inc. A in Low Volatility Momentum and Quality Value and F in Technicals and Growth.
PepsiCo, Inc (PEP)
PepsiCo, Inc slipped 0.35% Friday to $158.35 with nearly 3.5 million shares changing hands. The stock is up 6.8% for the year and currently trades at 24.8x forward earnings.
PepsiCo is an American multinational food, snack, and beverage corporation headquartered in New York. The company oversees the manufacturing, distribution, and marketing of 23 brands, including Frito-Lay, Tropicana Products, Quaker Oats, and Gatorade. Based on net revenue, profit, and market cap, PepsiCo is the second-largest food and beverage business in the world, right behind Nestlé.
PepsiCo’s stock has been on the rise since its Q2 2021 earnings call in mid-July. Management reported net sales of $19.2 billion – a rise of 20.5% YOY – thanks to returning demand for drinks in various food-service industries. Additionally, the company raised its full-year adjusted outlook, noting that its pandemic-era investments were now beginning to pay off for the company’s long-term financial gains.
Throughout the last three fiscal years, PepsiCo’s revenue leapt more than 15.3% to $70.4 billion from $64.7 billion. At the same time, operating income saw growth around 12.7% from $10.4 billion to $10.8 billion. However, per-share earnings fell from $8.78 to $5.12 in the period, while return on equity plunged from 98% to 50.5%.
All told, PepsiCo, Inc. is expected to see around 1.4% revenue growth in the next year. At this time, our artificial intelligence grades this U.S. Consumer Stock A in Technicals, Growth, and Quality Value, and F in Low Volatility Momentum.
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