Popular consumer staples stocks like The Procter & Gamble CompanyNYSE:PG) and The Coca-Cola Company (NYSE: KO) could be your knight in shining armor amid growing US recession fears and a rising interest rate environment.
Rising interest rates have weighed heavily on growth sectors such as technology. In fact, members of the all-popular tech group, under the recently coined acronym MATANA, have already failed in 2022. This basket of tech stocks includes big wigs like Microsoft.NASDAQ:MSFT), Apple (NASDAQ:AAPLTesla ()Nasdaq: TSLAAmazon (NASDAQ: AMZN), Nivea (NASDAQ:NVDA) and letters (NASDAQ:GOOGL)NASDAQ:GOOGBy 2022, they have decreased to 19.8%, 9.8%, 23.9%, 19.9%, 51.8% and 23.5% respectively.
With the threat of another interest rate hike from the Federal Reserve and other macroeconomic headwinds, there doesn’t seem to be any immediate relief for the tech sector. Additionally, the Fed’s recent super-hawkish stance has increased the risk of the US economy slipping into recession.
Given the current market backdrop, let’s take a look at the following consumer staples stocks that have low betas and can offer investors dividends along with a variety of benefits.
The Procter & Gamble Company (NYSE:PG)
The consumer staples company, with a market cap of $334.44 billion, makes home and personal care products related to health care, beauty, family care, home care, and baby care. Procter & Gamble has built a very strong brand name over the years and boasts impressive operational strength.
This major consumer goods company also offers a dividend yield of 2.55%, outperforming the sector average of 1.66%. Procter & Gamble shows a high dividend payout ratio of 61.34%. The low beta of 0.16 also explains PG stock’s low correlation to the broader market environment.
Buy or sell PG stock?
So far, Procter & Gamble stock looks like a good option to invest in. According to the TipRanks tool, financial bloggers seem bullish about PG stock. Financial bloggers’ sentiment is 81% bullish on PG stock, higher than the sector average of 64%.
Meanwhile, analysts have mixed feelings about Procter & Gamble stock. According to Tipranks, Street is cautiously optimistic about PG stock as it maintains a moderate buy consensus rating based on seven buys and five bells.
Finally, PG stock has an average price target of $155.08, indicating a potential upside of 9.9% from current levels.
The Coca-Cola Company (NYSE: KO)
Beverage giant Coca-Cola has a market cap of $269.51 billion. The company posted impressive second-quarter results largely on the back of price hikes and a strong recovery in volumes due to increased away-from-home consumption. Coca-Cola has raised its full-year organic revenue growth guidance, painting a bright picture ahead.
Coca-Cola’s dividend yield is 2.76%, which is higher than the sector average of 1.66%. The company’s dividend payout ratio of 70.33% looks attractive. The beverage giant’s low beta of 0.46 is also worth mentioning.
Is Coca-Cola a good stock to buy?
Coca-Cola stock seems like a good choice. Turning to Wall Street, analysts are bullish on KO stock with a strong Buy rating based on nine Buys and three Holds. KO stock has an average price of $70.25, indicating a potential upside of 12.4% from its current level.
Moreover, financial bloggers and retail investors seem very bullish about KO stock. Financial bloggers’ sentiment is 87% bullish on KO stock, higher than the sector average of 64%. Retail investors have also increased their holdings in KO stock by 1.1% over the last 30 days.
Finally, according to the TipRanks tool, KO stock holds a SmartScore of 9 out of 10, highlighting its superior upside potential.
Summary: Take shelter in consumer staples in market turmoil
Market turmoil in the technology sector has already shifted investments from growth-oriented to value-oriented areas. The consumer staples sector deals with demand levels that do not fluctuate with economic cycles. Therefore, resilient consumer spending in this non-cyclical sector makes it a good defensive investment option to weather the storm.
With their strong fundamentals and attractive dividends, Procter & Gamble and Coca-Cola look like good investment options. Adding to their appeal, PG and KO offer higher dividend yields than the general consumer goods sector average.
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