While concerns like inflation, interest rates, and a possible recession continue to challenge stocks, that doesn’t mean you should be sitting on the sidelines. Rather, you should be still active in the markets, focusing on high quality, resilient names, that can ride out any additional uncertainty that may arise. For instance, with these consumer stocks to buy and hold.
What do I mean when I say “to buy and hold?” These aren’t stocks to trade. Nor are they stocks to buy ahead of a single catalyst, only to sell once said catalyst plays out. No, these are the stocks to buy, with the intention of holding them for many years. Through bull and bear markets.
Doing so stands to pay off in two ways. First, through the payment of steady dividends. Second, through gradual appreciation. Together, this can result in solid returns. What are some of the best consumer stocks to buy and hold? Consider these seven, all but one of which earn an “A” rating in my Portfolio Grader.
| CALM | Cal-Maine Foods | $51.98 |
| GIS | General Mills | $75.64 |
| HSY | Hershey Company | $226.42 |
| KO | Coca-Cola | $64.05 |
| POST | Post Holdings | $88.49 |
| PPC | Pilgrim’s Pride | $31.05 |
| TWNK | Hostess Brands | $22.95 |
Consumer Stocks to Buy and Hold: Cal-Maine Foods (CALM)
Based in Ridgeland, Mississippi, Cal-Maine Foods (NASDAQ:CALM) is a leading egg producer. It markets eggs under brands such as Egg-Land’s Best and Land O’ Lakes. Shares in this consumer staples stock have held up very well year-to-date.
Rising prices have countered rising costs, such as the soaring price of corn and soybeans, to feed the chickens that lay the eggs. Revenues have soared in the past year, and earnings have surged back to levels not seen in several years. But while CALM stock is up 44% year-to-date, it’s not too late to enter a long-term position.
Given its pricing power, food inflation stands to continue working in Cal-Maine’s favor. While arguably a value stock, with its low price-to-earnings ratio of 10.3x, admittedly it’s not a high-yielder. Its forward dividend yield is only 0.93%. However, if high earnings continue, it has plenty of room to raise this payout.
This stock earns an “A” rating in my Portfolio Grader.
General Mills (GIS)
One of the best known foods companies, General Mills (NYSE:GIS) needs little introduction. Owning scores of popular food brands, from Cheerios to Yoplait, it’s easy to see why its shares are one of the best consumer stocks to buy and hold.
Producing everyday food items, it’s a recession resistant business. Although it’s been facing inflation pressures, last quarter it managed to raise gross margins, despite the continued rise of ingredient, labor, and shipping costs. This bodes well going forward. Even if inflation persists, the company could still be able to deliver earnings growth, albeit growth that will likely be in the single-digit range.
This will enable the company to continue raising its dividend (current forward yield of 2.93%). Also, GIS stock will likely continue moving higher, in tandem with increased earnings. Trading at a favorable valuation (18.5x earnings), consider making it a long-term position.
This stock earns an “A” rating in my Portfolio Grader.
Hershey Company (HSY)
Hershey Company (NYSE:HSY) is another famous food company that’s managed to stay one step ahead of inflation. As I discussed last month, the confectionary and snack company delivered strong numbers in its latest quarterly earnings report. It also raised its guidance.
With this, it’s no surprise HSY stock is up in a down year for stocks. While major indices remain underwater by double-digits, this stock is up by double-digits (12.95%) year-to-date (or YTD). Still, that doesn’t mean it’s too late to make this sweet stock a long-term holding in your portfolio.
Over the long-term, Hershey will likely continue to rise in line with increased earnings. Its 1.65% dividend yield will boost its total returns. Especially as this payout increases with time. The company has a thirteen year track record of dividend growth. It’s increased its dividend an average of 7.83% annually over the past five years.
This stock earns an “A” rating in my Portfolio Grader.
Consumer Stocks to Buy and Hold: Coca-Cola (KO)
No list of the best long-term consumer stocks would be complete without mentioning Coca-Cola (NYSE:KO). A prime example of a blue chip stock, Coca-Cola has a strong balance sheet, high margins and a deep economic moat.
It also has a history of rewarding KO stock investors with a consistently-growing dividend. Raising its payout 59 years in a row, it’s not just a dividend aristocrat, but a dividend king as well. Out of thousands of publicly-traded companies, only a few dozen are in that category.
While up for the year (6.26%), it hasn’t performed as strongly as some of the other consumer stocks discussed above and below. Even so, I wouldn’t say it’s likely to deliver subpar returns going forward. Besides its dividend (2.79% forward yield) generating a steady stream of income, modest levels of earnings growth will enable it to achieve higher prices over a long timeframe.
This stock earns an “B” rating in my Portfolio Grader.
Post Holdings (POST)
Best known for its cereal brands, Post Holdings (NYSE:POST) is involved in other areas of the packaged foods business as well. It was also involved in the powdered and ready-to-drink protein business, yet recently spun off this segment, now known as BellRing Brands (NYSE:BRBR).
Although its gross margins have taken a hit due to inflationary pressures, increased prices enabled the company to increase its adjusted EBITDA last quarter by 3.7% compared to the prior year’s quarter.
With a steady, recession-resistant business, the company stands to continue producing consistent cash flow. It can use this operating cash flow ($567.9 million over the past twelve months) to either make new bolt-on acquisitions that complement its existing business. Or, it could use the cash to pare down its $6.3 billion long-term debt position. Either option could help create long-term value for POST stock investors.
This stock earns an “A” rating in my Portfolio Grader.
Pilgrim’s Pride (PPC)
A producer of poultry and pork products, high food prices have been a tailwind for Pilgrim’s Pride (NASDAQ:PPC). Inflation and the supply shocks stemming from the Russia-Ukraine war have resulted in higher ingredient costs, but this company has been able to pass along these increases on the consumer.
The result? A big jump in its profitability. Earnings last quarter clocked in at $1.50 per share, a massive increase from the 68 per share loss it reported in the prior year’s quarter. The positive impact of higher prices has been factored into the valuation of PPC stock. It’s up around 48% over the past twelve months.
Even so, Pilgrim’s Pride is still appealing, both in the near and long-term. Current trends point to continued strong fiscal performance. With its increased cash flow, it can maximize shareholder value. Whether through share repurchases, or from paying down its long-term debt.
This stock earns an “A” rating in my Portfolio Grader.
Consumer Stocks to Buy and Hold: Hostess Brands (TWNK)
Six years ago, after a successful turnaround, Hostess Brands (NASDAQ:TWNK) went public again, via a special purpose acquisition company (SPAC) merger. Shares in the snack foods company, famous for its Twinkies brand, have performed well since then, more than doubling in price.
It’s a business that performs well in good times and bad. Perhaps more so in tough times such as these, where its inexpensive comfort foods can be very appealing. This points to continued strong operating performance. TWNK stock currently does not pay a dividend, yet that may not be the case forever.
A lack of dividend likely will not limit its ability to appreciate in price over time, either. It could achieve this through steady earnings growth, which will justify a higher stock price. Attractively-priced at 22.8x estimated 2022 earnings, this is another one of the long-term plays to consider among consumer stocks.
This stock earns an “A” rating in my Portfolio Grader.
On the date of publication, Louis Navellier had a long position in CALM and PPC. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.