Amid sky-high inflation and consecutive rate hikes, benchmark indices have lost substantially, and the overall markets bear a grim outlook. The S&P 500 has lost 19.5% year-to-date, while the Dow Jones Industrial Average has lost 10.4% year-to-date.

However, consumer staples stocks with relatively inelastic demand continue to witness stable growth despite the broader market sell-off. Investors’ interest in consumer staples stocks is evident from the Consumer Staples Select Sector SPDR ETF’s (XLP) 8.7% returns over the past month.

Moreover, U.S. consumer spending surpassed estimates in September 2022. Christopher Rupkey, the chief economist at FWDBONDS in New York, said, “Americans may say they are worried about inflation, but they are still out shopping, which keeps the economy growing for another quarter.”

Given the backdrop, we think fundamentally sound consumer staples stocks Casey’s General Stores, Inc. (CASY) and Ingles Markets, Incorporated (IMKTA) could be ideal buys to ride out the market turmoil.

Casey’s General Stores, Inc. (CASY)

CASY operates convenience stores under the Casey’s and Casey’s General Store names. It offers a selection of food, beverages, tobacco and nicotine products, health and beauty aids, automotive products, and other non-food items.

On November 1, 2022, the company stated that it continues to expand its alternative fuel options in response to evolving guest needs and as part of its environmental stewardship efforts.

On September 7, 2022, Darren Rebelez, President and CEO, said, “Our differentiated business model enables us to perform well in a variety of economic conditions, and we are confident in our ability to execute on our long-term strategic plan.”

CASY’s total revenues came in at $4.45 billion for the first quarter that ended July 31, 2022, up 40% year-over-year. Moreover, its net income came in at $152.93 million, up 28.3% year-over-year. Also, EPS came in at $4.09, up 28.2% year-over-year.

Analysts expect CASY’s revenue to increase 23% year-over-year to $15.93 billion in 2023. Its EPS is expected to grow 10.9% year-over-year to $10.09 in 2023. It surpassed EPS estimates in three of four trailing quarters. Over the past year, the stock has gained 19.2% to close the last trading session at $230.56.

CASY’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall A rating indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. 

CASY has a B grade for Growth, Value, Sentiment, and Quality. In the A-rated Grocery/Big Box Retailers industry, it is ranked #3 out of 38 stocks. Click here for the additional POWR Ratings for Momentum and Stability for CASY.

Ingles Markets, Incorporated (IMKTA)

IMKTA operates a chain of supermarkets in the southeast United States. It offers food products, including grocery, meat, and dairy products, produce, frozen foods, and other perishables, and non-food products, including fuel centers, pharmacies, health and beauty care products, and general merchandise as private label items.

On September 26, 2022, IMKTA declared a cash dividend of $0.165 per share on all its Class A Common Stock and $0.15 per share on all its Class B Common Stock. Both dividends were payable on October 13, 2022. This underscores the company’s strong cash position.

On August 4, 2022, Robert P. Ingle II, Chairman of the Board, stated, “We were able to achieve strong results during the quarter, despite significant inflationary pressures. We applaud the hard work and dedication of our associates at all levels of our Company for helping us exceed prior year-to-date performance.”

IMKTA’s net sales came in at $1.46 billion for the third quarter ended July 31, 2022, up 14.1% year-over-year. Its gross profit came in at $351.88 million, up 18.3% year-over-year. Its total assets came in at $2.22 billion as of June 25, 2022, compared to $2.02 billion as of September 25, 2021.

IMKTA’s revenue is expected to increase by 3% year-over-year to $4.70 billion in 2023. Its EPS is expected to grow 14.5% per annum for the next five years. Over the past year, the stock has gained 31.3% to close the last trading session at $91.89.

IMKTA has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It has an A grade for Quality and a B for Growth, Value, and Stability. It is ranked #1 in the Grocery/Big Box Retailers industry.

Beyond what is stated above, we’ve also rated IMKTA for Sentiment and Momentum. Get all IMKTA ratings here.

CASY shares were trading at $232.26 per share on Wednesday afternoon, up $1.70 (+0.74%). Year-to-date, CASY has gained 18.53%, versus a -17.77% rise in the benchmark S&P 500 index during the same period.

About the Author: Rashmi Kumari

Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...

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