Despite the inflation cooling down lately, it still remains way above the Fed’s target. While the central bank has reduced the magnitude of its interest rate hike this month, it intends to continue raising rates through 2023. Therefore, experts expect the economy to witness a recession.
Given this backdrop, it could be wise to invest in industries that perform steadily because of the inelastic demand for their products and services. Consumer staples, such as food and beverages, hygiene products, and household supplies, enjoy steady demand regardless of economic conditions.
Investors’ interest in consumer staples stocks is evident from the Vanguard Consumer Staples ETF’s (VDC) 10.3% returns over the past three months. Therefore, fundamentally strong consumer staples stocks Colgate-Palmolive Company (CL), Ennis, Inc. (EBF), and Mannatech, Incorporated (MTEX) could be wise additions to one’s portfolio to stay protected against a turbulent market.
Colgate-Palmolive Company (CL)
CL manufactures and sells consumer products worldwide. The company operates through two segments, Oral, Personal and Home Care; and Pet Nutrition.
Over the last three years, CL’s dividend payouts have grown at a 2.8% CAGR. Its four-year average dividend yield is 2.35%, and its forward annual dividend of $1.88 per share translates to a 2.39% yield. It paid a quarterly dividend of $0.47 per share on November 15, 2022.
CL’s net sales for the fiscal third quarter ended September 30, 2022, increased marginally year-over-year to $4.46 billion. Its total assets increased 2.6% year-over-year to $16.29 billion. Additionally, its EPS came in at $0.74.
CL’s EPS for the quarter ending March 31, 2023, is expected to increase marginally year-over-year to $0.74. Its revenue for the quarter ending December 31, 2022, is expected to increase 3.3% year-over-year to $4.55 billion. The stock has gained 10.6% over the past three months to close the last trading session at $79.37.
CL’s positive outlook is reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the Consumer Goods industry, it is ranked #5 out of 57 stocks. It has an A grade for Quality and a B for Stability.
To see the additional ratings of CL for Growth, Value, Momentum, and Sentiment, click here.
Ennis, Inc. (EBF)
EBF designs, manufactures, and sells business forms and other business products. The company offers snap sets, continuous forms, laser cut sheets, tags, labels, envelopes, integrated products, jumbo rolls, and pressure-sensitive products. It distributes business products and forms through independent distributors.
Over the last three years, EBF’s dividend payouts have grown at a 3.6% CAGR. Its four-year average dividend yield is 4.81%, and its forward annual dividend of $1.00 per share translates to a 4.39% yield. It paid a quarterly dividend of $0.25 per share on November 4, 2022.
On November 30, 2022, EBF announced its acquisition of School Photo Marketing. It provides printing, yearbook publishing, and marketing-related services. Chairman, President & CEO of EBF, Keith Walters, stated, "This addition brings with it many exciting possibilities to service this new channel with products produced through Ennis manufacturing operations."
EBF’s revenues for the fiscal third quarter ended November 30, 2022, increased 7.1% year-over-year to $110.25 million. The company’s net earnings increased 49.2% year-over-year to $11.29 million. Moreover, its non-GAAP EBITDA increased 35.1% year-over-year to $20.8 million, while its EPS came in at $0.44, representing a 51.7% increase from the prior-year quarter.
EBF’s EPS and revenue for the fiscal quarter ending February 28, 2023, are expected to increase 33.3% and 2.2% year-over-year to $0.36 and $101.85 million, respectively. It has a commendable earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 16.5% to close the last trading session at $22.17.
EBF’s strong fundamentals are reflected in its POWR Ratings. The company has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. It is ranked first in the same industry. In addition, it has an A grade for Quality and a B for Stability and Sentiment.
We have also given EBF grades for Growth, Value, and Momentum. Get all EBF ratings here.
Mannatech, Incorporated (MTEX)
MTEX operates as a health and wellness company worldwide. It develops, markets, and sells nutritional supplements, topical, skincare, anti-aging, and weight-management products.
Over the last three years, MTEX’s dividend payouts have grown at a 17% CAGR. Its four-year average dividend yield is 6.76%, and its forward annual dividend of $0.80 per share translates to a 4.40% yield. It paid a quarterly dividend of $0.20 per share on December 28, 2022.
MTEX’s total operating expenses for the third quarter ended September 30, 2022, declined 5.4% from the year-ago period to $26.74 million. Also, its EPS came in at $0.61.
The stock has gained 16.2% over the past six months to close the last trading session at $18.12
MTEX’s solid prospects are reflected in its POWR Ratings. The company has an overall rating of B, which equates to a Buy in our proprietary rating system. It is ranked #4 in the same industry. In addition, it has an A grade for Value and Quality and a B for Sentiment.
In total, we rate MTEX on eight different levels. Beyond what we stated above, we have also given MTEX grades for Growth, Momentum, and Stability. Get all MTEX ratings here.
CL shares were trading at $78.71 per share on Friday morning, down $0.66 (-0.83%). Year-to-date, CL has declined -5.54%, versus a -18.62% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
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