The consumer goods industry is rapidly expanding worldwide, thanks to the rapid increase in population. The growing preference for e-commerce and online distribution is another key driver boosting the FMCG industry. The global FMCG market is projected to reach $15.36 trillion by 2025, registering a CAGR of 5.4%.
While inflation is gradually declining, it still remains significantly high and far from the Fed’s 2% target. With the Fed likely to continue rate hikes this year, a recession might be imminent. Moreover, the IMF has forecasted that global growth will drop to 2.7% or less in 2023, compared with 6% in 2021 and 3.2% in 2022.
Consumer staples, such as food and beverages, hygiene products, and household supplies, enjoy steady demand regardless of economic conditions. Hence, it could be wise to invest in such industries to hedge against market downturns.
Therefore, fundamentally strong consumer goods stocks Unilever PLC (UL), Colgate-Palmolive Company (CL), and Ennis, Inc. (EBF) might be ideal buys. Also, these stocks pay stable dividends.
Unilever PLC (UL)
UL, headquartered in London, is a fast-moving consumer goods company. It operates through the broad segments of Beauty & Personal Care; Foods & Refreshment; and Home Care.
On December 15, it was reported that UL was planning to roll out refrigeration trailers powered by batteries rather than diesel across the European Union in the second half of 2023 to cut emissions and energy costs.
UL pays a $1.68 per share dividend quarterly, which translates to a 3.38% yield on the current price. Its dividend payments have grown at a CAGR of 2.9% over the past five years. The company has a four-year average dividend yield of 3.47%. Also, it has paid dividends for 12 consecutive years.
UL’s turnover rose 17.8% year-over-year to €15.85 billion ($55.16 billion) in the third quarter of 2022, with an underlying sales growth of 10.6%.
Analysts expect UL’s revenue to rise 8.4% year-over-year to $65 billion in 2022, and its EPS is likely to come it at $2.64 for the same year. Additionally, it has topped consensus revenue estimates in three of the trailing four quarters, which is impressive.
The stock has gained 11.5% over the past three months to close its last trading session at $49.82.
UL’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
UL also has a B grade for Value, Sentiment, and Stability. It is ranked #10 of 58 stocks in the Consumer goods industry.
Beyond what is stated above, we’ve also rated UL for Growth, Quality, and Momentum. Get all UL ratings here.
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.
On January 12, CL announced a dividend of $1.13 per share, payable on February 14, 2023. CL pays $1.88 dividends annually, which translates to a yield of 2.63% at the current price, compared to the 4-year average dividend yield of 2.34%. Also, it has paid dividends for 59 consecutive years.
CL’s net sales increased 5.1% year-over-year to $4.63 billion in the fourth quarter, which ended December 31, 2022. The company’s gross profit increased marginally year-over-year to $2.57 billion, while its earnings per common share stood at $0.01.
CL’s revenue for the fiscal year ending December 2023 is expected to come in at $18.69 billion, indicating a 4% year-over-year growth. The company’s EPS for the same period is expected to increase by 5.6% from the prior-year period to $3.14. Additionally, it has topped consensus revenue and EPS estimates in three of the trailing four quarters.
The stock has declined 2.2% over the past three months to close the last trading session at $71.59.
It is no surprise that the stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
CL also has a B grade for Stability, Sentiment, and Quality. It is ranked #3 in the same industry.
To access additional ratings for CL’s Growth, Value, and Momentum, 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.
On December 15, 2022, EBF declared a dividend of $0.25 per share, payable on February 2, 2023. The company pays a $1.00 dividend quarterly, which translates to a yield of 4.82% at the current price. Also, it has paid dividends for eight consecutive years.
EBF’s revenue rose 7.1% year-over-year to $110.25 million in the third quarter that ended November 30, 2022. The company’s non-GAAP EBITDA increased 35.1% year-over-year to $20.80 million. Also, its earnings per share came in at $0.44, up 51.7% from the prior-year quarter.
Street EPS estimate of $0.36 for the fiscal fourth quarter (ending February 2023) reflects a rise of 33.3% year-over-year. Its revenue estimate for the same quarter of $101.85 million indicates an improvement of 2.2% from the prior-year quarter. Additionally, EBF has topped consensus revenue and EPS estimates in three of the trailing four quarters.
The stock has gained 19.5% over the past nine months to close the last trading session at $20.76.
EBF’s robust prospect is reflected in its POWR Ratings. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
EBF has an A grade for Quality and B in Growth, Sentiment, and Stability. It is ranked first in the same industry.
Click here to see the additional POWR Ratings for EBF (Value and Momentum).
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UL shares were trading at $50.35 per share on Monday morning, up $0.53 (+1.06%). Year-to-date, UL has declined 0.00%, versus a 5.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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