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{\"0\":\"U.S. consumer sentiment slips in October as inflation and job market concerns persist.\",\"1\":\"Investors are turning to defensive consumer staples to weather market volatility.\",\"2\":\"ENR, GO, UNFI and OLLI show steady earnings growth and improved estimates over 60 days.\"}
U.S. consumer sentiment showed no signs of improvement in October, shrinking further from the previous month, as Americans hoped for some positive developments while trying to look beyond the ongoing government shutdown. Concerns over high inflation and the weakening job market persisted.
Although the latest reading came in slightly better than expected, overall confidence remains low as uncertainty about the economy’s direction continues. This has seen Wall Street turn volatile this month, with renewed fears of a trade spat with China.
In such an environment, investors may want to focus on low-beta, defensive stocks — especially from the consumer staples sector — to help cushion against market swings. Companies like Energizer Holdings, Inc. (ENR - Free Report) , Grocery Outlet Holding Corp. (GO - Free Report) , United Natural Foods, Inc. (UNFI - Free Report) and Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) fit this category.
Consumer Sentiment Continues to be Low
The University of Michigan’s Surveys of Consumers preliminary reading for consumer sentiment came in at 55 for October, down 0.1 point from September’s 55.1 and but higher than the analysts’ expectations of 54.1.
The near-unchanged result came as short-term inflation expectations eased slightly, with consumers projecting a 4.6% inflation rate over the next 12 months — down from 4.7% the month before. Long-term inflation expectations, covering the next five years, remained unchanged at 3.7%.
Despite the marginal decline, inflation remains elevated, and near-term price pressures continue to weigh on sentiment. The Federal Reserve lowered interest rates by 25 basis points in September and signaled the possibility of two more similar cuts before year-end. Even so, high inflation and a tightening labor market remain key challenges.
Meanwhile, the ongoing government shutdown — now in its third week — has brought federal funding to a standstill. Although investors have tried to ignore the situation, market volatility has risen, and all three major stock indexes ended lower last week.
To make the situation worse, President Donald Trump last week threatened to impose 100% tariffs on China, reigniting fears of a trade spat between the two nations. Markets have since turned more volatile.
4 Consumer Staple Stocks With Growth Potential
Energizer Holdings, Inc.
Energizer Holdings, Inc. is one of the world’s leading manufacturers and distributors of batteries and lighting products. ENR is a major designer and marketer of automotive fragrance, appearance and air conditioning recharge products.
Energizer Holdings has an expected earnings growth rate of 8.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the last 60 days.
Grocery Outlet
Grocery Outlet Holding Corp. is a high-growth, extreme-value retailer of quality, name-brand consumables and fresh products that are sold through a network of independently owned and operated stores. Notably, GO’s stores offer a fun, treasure hunt shopping experience in an easy-to-navigate, “small-box” format of size 15,000-20,000 square feet.
Grocery Outlet has an expected earnings growth rate of 1.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the last 60 days.
United Natural Foods
United Natural Foods, Inc. is the leading distributor of natural, organic and specialty food and non-food products in the United States and Canada. UNFI offers approximately 250,000 products, consisting of national, regional and private label brands, grouped into the following main product categories — grocery and general merchandise; perishables; frozen foods; wellness and personal care items; and bulk and foodservice products.
United Natural Foods’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current-year earnings has improved 24% over the past 60 days.
Ollie's Bargain Outlet Holdings, Inc.
Ollie's Bargain Outlet Holdings, Inc. is a value retailer of brand-name merchandise at drastically reduced prices. OLLI offers products principally under Ollie’s, Ollie’s Bargain Outlet, Good Stuff Cheap, Ollie’s Army, Real Brands Real Cheap!, Real Brands! Real Bargains!, Sarasota Breeze, Steelton Tools, American Way and Middleton Home.
Ollie's Bargain Outlet’s expected earnings growth rate for the current year is 16.5%. The Zacks Consensus Estimate for its current-year earnings has improved 2.1% over the past 60 days.
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4 Solid Consumer Staples Stocks Amid Declining Consumer Sentiment
Key Takeaways
U.S. consumer sentiment showed no signs of improvement in October, shrinking further from the previous month, as Americans hoped for some positive developments while trying to look beyond the ongoing government shutdown. Concerns over high inflation and the weakening job market persisted.
Although the latest reading came in slightly better than expected, overall confidence remains low as uncertainty about the economy’s direction continues. This has seen Wall Street turn volatile this month, with renewed fears of a trade spat with China.
In such an environment, investors may want to focus on low-beta, defensive stocks — especially from the consumer staples sector — to help cushion against market swings. Companies like Energizer Holdings, Inc. (ENR - Free Report) , Grocery Outlet Holding Corp. (GO - Free Report) , United Natural Foods, Inc. (UNFI - Free Report) and Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) fit this category.
Consumer Sentiment Continues to be Low
The University of Michigan’s Surveys of Consumers preliminary reading for consumer sentiment came in at 55 for October, down 0.1 point from September’s 55.1 and but higher than the analysts’ expectations of 54.1.
The near-unchanged result came as short-term inflation expectations eased slightly, with consumers projecting a 4.6% inflation rate over the next 12 months — down from 4.7% the month before. Long-term inflation expectations, covering the next five years, remained unchanged at 3.7%.
Despite the marginal decline, inflation remains elevated, and near-term price pressures continue to weigh on sentiment. The Federal Reserve lowered interest rates by 25 basis points in September and signaled the possibility of two more similar cuts before year-end. Even so, high inflation and a tightening labor market remain key challenges.
Meanwhile, the ongoing government shutdown — now in its third week — has brought federal funding to a standstill. Although investors have tried to ignore the situation, market volatility has risen, and all three major stock indexes ended lower last week.
To make the situation worse, President Donald Trump last week threatened to impose 100% tariffs on China, reigniting fears of a trade spat between the two nations. Markets have since turned more volatile.
4 Consumer Staple Stocks With Growth Potential
Energizer Holdings, Inc.
Energizer Holdings, Inc. is one of the world’s leading manufacturers and distributors of batteries and lighting products. ENR is a major designer and marketer of automotive fragrance, appearance and air conditioning recharge products.
Energizer Holdings has an expected earnings growth rate of 8.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the last 60 days.
Grocery Outlet
Grocery Outlet Holding Corp. is a high-growth, extreme-value retailer of quality, name-brand consumables and fresh products that are sold through a network of independently owned and operated stores. Notably, GO’s stores offer a fun, treasure hunt shopping experience in an easy-to-navigate, “small-box” format of size 15,000-20,000 square feet.
Grocery Outlet has an expected earnings growth rate of 1.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the last 60 days.
United Natural Foods
United Natural Foods, Inc. is the leading distributor of natural, organic and specialty food and non-food products in the United States and Canada. UNFI offers approximately 250,000 products, consisting of national, regional and private label brands, grouped into the following main product categories — grocery and general merchandise; perishables; frozen foods; wellness and personal care items; and bulk and foodservice products.
United Natural Foods’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current-year earnings has improved 24% over the past 60 days.
Ollie's Bargain Outlet Holdings, Inc.
Ollie's Bargain Outlet Holdings, Inc. is a value retailer of brand-name merchandise at drastically reduced prices. OLLI offers products principally under Ollie’s, Ollie’s Bargain Outlet, Good Stuff Cheap, Ollie’s Army, Real Brands Real Cheap!, Real Brands! Real Bargains!, Sarasota Breeze, Steelton Tools, American Way and Middleton Home.
Ollie's Bargain Outlet’s expected earnings growth rate for the current year is 16.5%. The Zacks Consensus Estimate for its current-year earnings has improved 2.1% over the past 60 days.