As stocks retreat from previous highs, consumer staples stocks may provide a safe harbor in turbulent markets.
Consumer staples stocks rated a Buy or Strong Buy include the Clorox Company and Tyson Foods.
These four stocks are considered low-beta, which means their value is more resistant to market volatility.
Stocks have retreated sharply from their previous highs in a shaky start to 2025. Wall Street suffered further on Friday, with all three major indexes now pushed into the red for this year on concerns that the Federal Reserve will pause rate cuts for a while as the economy appears to be on solid ground.
Higher interest could unsettle markets and impact various sectors. Given the uncertainty, it would be prudent to invest in stocks from defensive spaces like consumer staples, such as The Clorox Company CLX, Altria Group, Inc. MO, Ollie's Bargain Outlet Holdings, Inc. OLLI and Tyson Foods TSN.Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Federal Reserve Likely to Hold Rate Cuts
The U.S. economy is still on solid ground as fresh data on Friday showed that private payrolls jumped 256,000 in December, sharply higher than the consensus estimate of a rise of 155,000. On the other hand, the unemployment rate, which was expected to remain unchanged at 4.2%, also declined to 4.1% in December.
While the news is good for the economy, investors’ confidence took a hit as they believe this could force the Federal Reserve to go slow on interest rate cuts this year. Also, inflation has again started showing signs of rising over the past couple of months.
The consumer price index (CPI) rose 0.3% in November, its largest gain since April 2024, after rising 0.2% for four consecutive months. Core CPI, which excludes the volatile food and energy costs, climbed 0.3% month over month in November and 3.3% from the year-ago levels. These factors have been weighing on stocks.
Fed Hints at Fewer Rate Cuts
The Federal Reserve, last month, also said that it sees two rate cuts at the most this year. The Federal Reserve cut interest rates by a total of 100 basis points in three installments in 2024, taking its benchmark policy rate in the current range of 4.25-4.50%. However, interest rates remain high, which has been hurting both businesses and consumers.
Markets are now pricing in a 97.3% chance that the Federal Reserve will leave interest rates unchanged in its next policy meeting at the end of January, according to CME FedWatch tool. Also, 77.9% believe that interest rates won’t be slashed further till March. Higher rates could make markets volatile for a longer period.
4 Low-Beta Consumer Staples Stocks With Growth Potential
The Clorox Company
The Clorox Company is engaged in the production, marketing and sales of consumer products in the United States and international markets. CLX sells its products primarily through mass merchandisers, grocery stores and other retail outlets.
The Clorox Company has an expected earnings growth rate of 11.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 60 days. CLX currently has a Zacks Rank #2. The Clorox Company has a beta of 0.42 and a current dividend yield of 3.10%.
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Altria Group
Altria Group, Inc. has been evolving with the changing industry dynamics. Given the rising health consciousness and stern government regulations to discourage smoking, MO has been moving beyond traditional cigarettes and expanding in the smokeless category.
Altria Group has an expected earnings growth rate of 3.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.2% over the last 60 days. MO currently has a Zacks Rank #2. Altria Group has a beta of 0.64 and a current dividend yield of 8.02%.
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Ollie's Bargain Outlet Holdings
Ollie's Bargain Outlet Holdings, Inc.i s 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 13.1%. The Zacks Consensus Estimate for its current-year earnings has improved 0.6% over the past 60 days. OLLI currently has a Zacks Rank #2. Ollie's Bargain Outlet Holdingshas a beta of 0.82.
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Tyson Foods
Tyson Foods is the biggest U.S. chicken company that produces, distributes and markets chicken, beef, pork, as well as prepared foods. TSN’s products are marketed and sold primarily by sales staff to grocery retailers, grocery wholesalers, meat distributors, military commissaries, industrial food processing companies, chain restaurants, international export companies and domestic distributors.
Tyson Foods’expected earnings growth rate for the current year is 13.6%. The Zacks Consensus Estimate for the current-year earnings has improved 6.7% over the past 60 days. TSN currently sports a Zacks Rank #1. Tyson Foods has a beta of 0.81 and a current dividend yield of 3.69%.
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