It’s easy to overlook consumer staples stocks when growth stocks are doing so well. After a monstrous 2023 rally for major indices like the Nasdaq 100 and the S&P 500, it’s easy to feel invincible as a growth investor.
While growth stocks can continue to rally higher, investors should never feel invincible about their decisions. That type of hubris can give way to considerable losses and a sense of panic that results in making the wrong decisions.
Consumer staples stocks usually don’t decline as much as the broader market during corrections and recessions. These same stocks also offer some upside during vibrant economic cycles. Investors may want to consider these three consumer staples to diversify their portfolios.
Monster Beverage (MNST)
Monster Beverage (NASDAQ:MNST) is past its heyday as a growth stock. Many investors have shifted their attention to smaller, faster-growing energy drink brands.
However, Monster Beverage is still growing at a good pace. Shares are up by 6.5% over the past year and have doubled over the past five years. Finances have also been good. The beverages company posted 14.3% year-over-year (YoY) revenue growth in the third quarter of 2023. Net income went up by 40.4% YoY.
Shares trade at a forward P/E ratio of 31. While growth isn’t as captivating as smaller beverage companies, this overlooked consumer staples stock offers a lower valuation and respectable growth. The company has been expanding via acquisitions and the success of its own beverages.
Leadership recently authorized a stock buyback of $500 million. The buyback will help to keep the stock price elevated and reward long-term investors.
Costco serves 129.5 million cardholders and 72 million households. The company’s Gold Star Members pay a $60 annual fee, and is a requirement to enter any Costco warehouse.
Costco makes a lot of money from its membership program, but it makes even more money when people visit the retailer’s stores. The Costco membership program attributed to 72% of the company’s profits over the past year. The membership incentivizes people to visit Costco more often to maximize their savings.
Costco started fiscal 2024 on the right note with 6% YoY revenue growth. Net income jumped by 16% YoY. The retailer is one of the largest on the globe and continues to hike its dividend for long-term investors. The company recently raised its dividend by 13% YoY, which does not include the company’s special dividend issued at the end of 2023.
Church & Dwight (CHD)
Church & Dwight (NYSE:CHD) produces many essential products that are a part of home care and personal grooming. The stock has been a steady performer among consumer staples stocks with a 19% gain over the past year. Shares are up by 55% over the past five years.
Church & Dwight has steadily raised its dividend over the years to an annualized $1.09 per share. It comes to a 1.10% dividend yield for new investors.
The firm has a lengthy history that started in 1846. The company has endured various economic cycles and can generate cash flow for investors. The company continued to grow in the third quarter of 2023, reporting a 10.5% YoY revenue increase.
Church & Dwight forecasted a 9% YoY revenue growth for the full year of 2023. Matthew Farrell, the company’s CEO, mentioned the company’s recent acquisitions have been making “significant distribution gains at retail.” These acquisitions include Therabreath mouthwash and the Hero brand — maker of Mighty Patch acne care products.
On the date of publication, Marc Guberti did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.