With President-elect Donald Trump’s second term beginning in a month, a wave of uncertainties has been lingering in the U.S. economy. Despite geopolitical crises, incoming policy changes, and a slowly creeping rate of inflation, consumer staples remain a stable investment option, acting as a buffer against these uncertainties.
Hence, investors could scoop up shares of fundamentally stable consumer staple stocks Walmart Inc. (WMT), Colgate-Palmolive Company (CL), and Kimberly-Clark Corporation (KMB) to look for steady returns in these uncertain times.
Trump’s second term could begin with a bang, ushering in sweeping policy changes set to reshape global dynamics. His proposed 60% tariffs on Chinese goods and a pledged 25% tariff on Canadian imports within his initial days in office signal a storm brewing in the global trade landscape.
Adding to this upheaval, Trump’s polarizing stance on the U.S.-Mexico border crisis threatens to deepen rifts between the two nations. This tension is likely to ripple across business and trade networks, creating a precarious balance. His contrasting views on NATO, the Gulf situation, and climate change further fuel market uncertainty.
Inflation, stubbornly falling short of the Federal Reserve's 2% target, compounds these concerns. Higher tariffs from the Trump administration could amplify costs, shrinking the scope for interest rate cuts next year. This tightrope walk leaves the U.S. economy exposed to unforeseen volatility.
Amid these shifts, consumer staples emerge as a silver lining. These essentials adhere to the principle of inelastic demand, maintaining their stronghold even if costs climb. In turbulent economic waters, their consistent demand offers a haven for stability and smart investment.
So now, let us dive deep into the fundamentals of three consumer staples, starting with #3.
Stock #3: Walmart Inc. (WMT)
WMT is an omnichannel retailer that operates its business through retail, wholesale, other units, and eCommerce modes. The company has three segments: Walmart U.S.; Walmart International; and Sam's Club. It operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, discount stores and others.
On December 3, Walmart completed the $2.3 billion acquisition of VIZIO, including its SmartCast operating system. With over 19 million active accounts, VIZIO’s expanding device ecosystem strengthens WMT’s ability to innovate customer experiences, leveraging smart TVs to elevate shopping convenience and engagement.
On November 21, WMT’s Mexican division, Walmex announced the opening of its 2500th Bodega Aurrera store in Mexicali, Mexico. These store formats offer a wide range of products at affordable prices. This landmark opening would strengthen WMT’s market presence in Mexico and boost its topline.
WMT’s trailing-12-month ROCE of 23.48% is 127.9% higher than the industry average of 10.31%. Its trailing-12-month ROTC of 11.49% is 65.3% higher than the sector average of 6.95%. Likewise, the stock’s trailing-12-month asset turnover ratio of 2.58x is 201.5% higher than the industry average of 0.86x.
For the fiscal 2025 third quarter that ended October 31, 2024, WMT’s total revenues increased 5.5% year-over-year to $169.59 billion. Its operating income rose 8.2% from the year-ago value to $6.71 billion. Additionally, consolidated net income attributable to WMT and adjusted EPS grew 910.4% and 850% from the prior year’s quarter to $4.58 billion and $0.57, respectively.
Analysts expect WMT’s revenue and EPS for the fiscal 2025 fourth quarter ending January 2025 to increase 4% and 6.8% year-over-year to $178.74 billion and $0.64, respectively. Moreover, the company topped the consensus revenue and EPS estimates in all four trailing quarters, which is impressive.
Shares of WMT have surged 42.3% over the past six months and 88.4% over the past year, closing the last trading session at $94.96.
WMT’s POWR Ratings mirror its sound fundamentals. The stock has an overall rating of B, translating to a Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.
WMT has an A grade for Stability and Sentiment and a B for Momentum. Within the A-rated Grocery/Big Box Retailers industry, it is ranked #14 out of 36 stocks.
In addition to the POWR Ratings highlighted above, you can check WMT’s ratings for Growth, Quality and Value here.
Stock #2: Colgate-Palmolive Company (CL)
CL manufactures and sells consumer products. It works through two segments: Oral, Personal and Home Care; and Pet Nutrition. The company sells its products under various brands such as Colgate, Darlie, elmex, hello, meridol, Sorriso, Tom's of Maine, Irish Spring, Palmolive, Protex, and more.
CL’s trailing-12-month gross profit margin of 60.42% is 67.1% higher than the industry average of 36.17%. Its trailing-12-month levered FCF margin of 14.82% is 165.9% higher than the sector average of 5.57%. Furthermore, the stock’s trailing-12-month net income margin of 14.26% is 234.1% higher than the 4.27% industry average.
For the fiscal 2024 third quarter that ended September 30, CL’s net sales increased 2.4% year-over-year to $5.03 billion. Its non-GAAP gross profit rose 7.1% from the year-ago value to $3.08 billion. Moreover, the company’s non-GAAP operating profit increased 4.8% year-over-year to $1.08 billion.
Additionally, non-GAAP net income attributable to CL and non-GAAP EPS grew 5.6% and 5.8% from the prior year’s quarter to $750 million and $0.91, respectively.
For the fiscal fourth quarter ending December 2024, Street expects CL’s revenue and EPS to increase 1.9% and 3.4% year-over-year to $5.05 billion and $0.90, respectively. Additionally, the company topped the consensus revenue and EPS estimates in all four trailing quarters, which is noteworthy.
CL’s shares have surged 5.3% over the past nine months and 19.5% over the past year to close the last trading session at $92.76.
CL’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
CL has an A grade for Quality and a B for Stability and Sentiment. It is ranked #14 out of 56 stocks in the Consumer Goods industry.
To access CL’s Momentum, Growth and Value ratings click here.
Stock #1: Kimberly-Clark Corporation (KMB)
KMB manufactures and markets personal care and consumer tissue products. The company has three segments: Personal Care; Consumer Tissue; and K-C Professional. It offers products under brands like Huggies, Pull-Ups, Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, and more.
On May 7, KMB’s Kimtech™ Polaris™ Nitrile Exam Glove earned the Accountability, Consistency, and Transparency (ACT) Environmental Impact Factor Label from My Green Lab®, the world’s premier ecolabel for laboratory products. This development could increase the sales of KMB’s gloves and boost its popularity in the laboratory equipment market.
KMB’s trailing-12-month levered FCF margin of 12.41% is 122.6% higher than the industry average of 5.57%. Its trailing-12-month EBITDA margin of 19.39% is 48% higher than the 13.11% industry average. Additionally, the stock’s trailing-12-month net income margin of 12.97% is 203.8% higher than the sector average of 4.27%.
For the fiscal third quarter that ended September 30, 2024, KMB’s net sales came in at $4.95 billion. Its operating profit increased 49.1% year-over-year to $1.15 billion. Moreover, adjusted net income attributable to KMB and adjusted EPS rose 4.6% and 5.2% from the prior year’s quarter to $617 million and $1.83, respectively.
KMB also increased its outlook for the fiscal 2024. The company expects a 3% to 4% growth in its organic net sales. Additionally, its adjusted operating profit and adjusted EPS are also expected to grow at a mid-to-high teens percentage rate on a constant-currency basis.
The consensus revenue estimate of $20.02 billion for the fiscal year ending December 2025 exhibits a marginal year-over-year rise. Its EPS for the same period is expected to rise 4.4% year-over-year to $7.64. Furthermore, the company surpassed the consensus EPS estimates in three of four trailing quarters.
Shares of KMB have surged 3% over the past nine months and 8% over the past year to close the last trading session at $130.61.
KMB’s POWR Ratings reflect its robust prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
KMB has a B grade for Quality, Value and Sentiment. it is ranked #7 out of 56 stocks in the Consumer Goods industry.
Click here to access KMB’s ratings for Stability, Momentum, and Growth.
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WMT shares rose $0.19 (+0.20%) in premarket trading Thursday. Year-to-date, WMT has gained 82.46%, versus a 29.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
3 Consumer Staple Stocks for Steady Returns in Uncertain Times StockNews.com
