Wall Street has remained volatile over the last three weeks on account of the second wave of the coronavirus. As many as 24 states witnessed a spike in new cases of COVID-19 after the economy started reopening from the last week of May.
Consequently, a large section of economists and financial experts, who were expecting a V-shaped recovery of the U.S. economy just a couple of week ago, are now skeptical.
At this juncture, it will be prudent to invest in consumer staple stocks with a favorable Zacks Rank to minimize portfolio risks.
Resurgence of Coronavirus Infections
On Jun 23, three states — Florida, California and Texas — reported a record-high single-day jump in coronavirus cases of 5,508, 7,000 and 5,489, respectively. According to data compiled by the Johns Hopkins University, the 7-day average of daily new COVID-19 cases jumped more than 30% compared with a week ago in the United States.
Moreover, the state governments of New York, New Jersey and Connecticut ordered visitors from certain hotspot states to quarantine for 14 days. Per Bloomberg, the governments of Texas, Florida, Arizona and California are considering slowing or reversing reopening plans of their economies.
Tech behemoth Apple Inc. (AAPL) has decided to re-close 18 of its stores in those states where COVID-19 cases spiked recently. Furthermore, AMC Entertainment Holdings Inc. (AMC), the world's largest movie theater operator, expressed fears that it may not be able to reopen 450 theaters in the United States next month due to the resurgence of the coronavirus infections. The Walt Disney Co. (DIS) has postponed two of its California-based theme parks that were scheduled to reopen on Jul 17.
On Jun 8, the National Bureau of Economic Research stated that the U.S. economy is in recession since mid-February, ending the historically longest 128 months of expansion due to the coronavirus-induced devastations.
The major agencies, namely, the World Bank, the IMF and the OECD forecast that the global economy will shrink 5.2%, 4.9% and 6%, respectively, in 2020, due to social distancing and lockdowns imposed by almost all countries in order to curb the spread of the deadly virus.
The COVID 19 crisis continues overseas too as several countries are currently facing a surge in new cases with governments tried to reopen economies. This has significantly disrupted global economic activities, resulting in a recession threat.
Why Consumer Staple Stocks?
The consumer staples sector includes companies that provide necessities and products for daily use. This makes the sector defensive in nature. Therefore, this has always been a go-to place for investors, who want to play it safe during extreme market fluctuations. Adding stocks from the consumer staples basket lends more stability to a portfolio in uncertain market conditions.
Our Top Picks
We have narrowed down our search to five consumer staple stocks that have popped in the past month with strong growth potential and robust earnings estimate revisions. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past month.
Medifast Inc. MED manufactures and distributes weight loss, weight management, healthy living products, and other consumable health and nutritional products in the United States and the Asia-Pacific.
The Zacks Rank #1 company has an expected earnings growth rate of 16.6% for the current year. The Zacks Consensus Estimate for current year earnings has improved by 2.4% over the past 30 days. The stock price has rallied 34.3% in the past month.
Ollie's Bargain Outlet Holdings Inc. OLLI is a value retailer of brand name merchandise at drastically reduced prices. The Zacks Rank #1 company has an expected earnings growth rate of 14.3% for the current year (ending January 2021). The Zacks Consensus Estimate for current year earnings has improved by 17.3% over the past 30 days. The stock price has jumped 14.4% in the past month.
Beyond Meat Inc. BYND is engaged in the provision of revolutionary plant-based meats in the United States and internationally. It offers its products in plant-based platforms of beef, pork, and poultry in ready-to-cook and ready-to-heat formats under the Beyond Beef, Beyond Chicken, The Beyond Burger, Beyond Meat, Beyond Sausage, Eat What You Love and The Cookout Classic brands.
The Zacks Rank #2 company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current year earnings has improved 14.3% over the past 30 days. The stock price climbed 11.2% in the past month.
The Hain Celestial Group Inc. HAIN manufactures, markets, distributes, and sells organic and natural products. It operates in seven segments: the United States, United Kingdom, Tilda, Ella's Kitchen UK, Canada, Europe and Hain Ventures.
The Zacks Rank #2 company has an expected earnings growth rate of 28.1% for the current year (ending June 2021). The Zacks Consensus Estimate for current year earnings has improved by 1% over the past 30 days. The stock price has surged 8.8% in the past month.
The Clorox Co. CLX manufactures and markets consumer and professional products worldwide. It operates through four segments: Cleaning, Household, Lifestyle and International.
The Zacks Rank #2 company has an expected earnings growth rate of 9.3% for the current year (ending June 2020). The Zacks Consensus Estimate for current-year earnings has improved by 0.3% over the past seven days. The stock has gained 7.2% in the past month.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
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The Hain Celestial Group, Inc. (HAIN) : Free Stock Analysis Report
The Clorox Company (CLX) : Free Stock Analysis Report
MEDIFAST INC (MED) : Free Stock Analysis Report
Ollies Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report
Beyond Meat, Inc. (BYND) : Free Stock Analysis Report
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