4 Consumer Defensive Stocks Bucking the Market's Downward Trend

NYSE: KO | Coca-Cola Company News, Ratings, and Charts

KO – The Fed’s decision to raise interest rates, a disappointing employment report, rising inflation, and persistent supply chain disruptions will likely continue spooking investors. So, in this environment, we think consumer defensive stocks Coca-Cola (KO), Colgate (CL), General Mills (GIS), and Hershey (HSY), which typically perform with aplomb during periods of market disquiet due to the relatively inelastic demand for their products, could be great picks now. Read on.

High inflation and the Fed’s decision to raise interest rates are souring investor sentiment. In addition, a weaker-than-expected job report and persistent supply chain issues could keep the stock market under pressure for some time. Amid such conditions, shares of consumer defensive companies, which enjoy relatively inelastic demand for their products, could offer steady returns.

Furthermore, top executives in big U.S. banks are optimistic about the nation’s economic outlook, and according to them, consumer spending patterns are also in good shape.

Therefore, consumer defensive stocks The Coca-Cola Company (KO), Colgate-Palmolive Company (CL), General Mills, Inc. (GIS), and The Hershey Company (HSY) are weathering the market’s downtrend. And we think their strong financials and consistent product innovations could help these stocks keep moving higher in the near term.

The Coca-Cola Company (KO)

KO in Atlanta, Ga., is a global nonalcoholic beverage company that sells and distributes its products in more than  200 countries and territories. The company provides soft drinks, sports drinks, juice, dairy, tea, coffee, and energy drinks. Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero Sugar, Fanta, Fresca, Schweppes, Sprite, Thumbs Up, Aquarius, Ciel, and Dasani are some of the brands under which KO markets its products.

In November 2021, KO acquired BODYARMOR, a sports performance line, and hydration beverages. The acquisition should benefit KO’s beverage portfolio and provide significant potential for long-term growth.

KO’s net operating revenues increased 16.1% year-over-year to $10.04 billion in the third quarter, ended Oct. 1, 2021. The company’s gross profit grew 17.1% from its year-ago value to $6.07 billion. Its operating income rose 26.1% from the prior-year quarter to $2.9 billion. And  the company’s EPS increased 42.5% year-over-year to $0.57.

Analysts expect KO’s revenue for its fiscal year 2022 to be $40.41 billion, representing a 6% increase year-over-year. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Also, its EPS is expected to grow 17.4% in fiscal 2021 and 6.1% in fiscal 2022. Its stock price has increased 20.9% over the past year and 9.4% over the past three months.

KO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

Also, the stock has an A grade for Quality and a B grade for Stability and Sentiment. We have also graded KO for Value, Growth, and Momentum. Click here to access all of KO’s ratings. KO is ranked #11 of 35 stocks in the B-rated Beverages industry.

Colgate-Palmolive Company (CL)

CL is a New York City-based household and consumer products company that operates in two segments: Oral, Personal, and Home Care; and Pet Nutrition. The company offers toothpaste, toothbrushes, mouthwash, deodorants and antiperspirants, skin health products, dishwashing detergents, household cleaners, and therapeutic products for pets.

This month, CL partnered with 3Shape, a digital dentistry 3D scanner software and service provider, to introduce Colgate Illuminator. The Colgate Illuminator is an exclusive, tailored-to-patient teeth whitening tool that will be available in dental clinics across the U.S. This tool should enable more accurate consultations and deliver an improved patient experience.

During the third quarter, ended Sept. 30, 2021, CL’s total net sales increased 6.3% year-over-year to $4.41 billion. The company’s operating profit came in at $967 million. Also, its cash and cash equivalents grew 7.9% to $958 million for the nine months ended Sept. 30, 2021.

CL’s revenue is expected to increase 3% year-over-year to $17.96 billion in its fiscal period 2022. In addition, the company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. Furthermore, its EPS is expected to increase 4.6% in fiscal 2021 and 5.3% in fiscal 2022. The stock has soared 6.9% in price over the past three months.

CL’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The stock has an A grade for Quality and a B grade for Stability.

In addition to the POWR Rating grades I’ve just highlighted, one can see CL’s ratings for Growth, Value, Sentiment, and Momentum here. The stock is ranked #8 of 65 stocks in the Consumer Goods industry.

General Mills, Inc. (GIS)

Minneapolis, Minn.-based GIS is a manufacturer and marketer of branded consumer foods sold through retail stores. The company operates in five segments–North America Retail; Convenience Stores & Foodservice; Europe & Australia; Asia & Latin America; and Pet. GIS offers fruit and savory snacks, nutrition bars, ready-to-eat cereal, convenient meals, and other food categories. The company operates 466 leased and 392 franchise ice cream parlors.

GIS’ net sales increased 6.5% year-over-year to $5.02 billion for its fiscal second quarter, ended Nov. 28, 2021. The company’s operating profit came in at $800.1 million. Its net earnings amounted to $597.2 million. Also, the company’s EPS was  $0.97 during this period.

GIS’s revenue for its fiscal 2022 is expected to be $18.82 billion, representing 3.8% year-over-year growth. Its EPS is expected to increase at the rate of 4.2% in fiscal 2022. The stock has surged 9.2% in price over the past three months and 14.7% over the past year.

It is no surprise that GIS has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has a B grade for Quality and Stability.

Click here to see the additional POWR Ratings for GIS (Value, Momentum, Growth, and Sentiment). GIS is ranked #27 of 85 stocks in the B-rated Food Makers industry.

The Hershey Company (HSY)

HSY in Hershey, Pa., is a global confectionery company that produces snacks, chocolate, and non-chocolate confectionery. The company operates in two segments, North America; and International and Other. Hershey’s, Reese’s, Kisses, Jolly Rancher, Almond Joy, Brookside are a few brands under which HSY markets its products. HSY also offers gum and mint refreshments, pantry items, baking ingredients, toppings, and beverages.

Last month, HSY acquired Dot’s Pretzels, the owner of Dot’s Homestyle Pretzels, and Pretzels Inc., a manufacturer of pretzels in the United States, for $1.2 billion. The acquisition should accelerate HSY’s snacking powerhouse vision by adding the fastest-growing scale U.S. pretzel brand to its portfolio.

HSY’s net sales increased 6.3% year-over-year to $2.36 billion for the third quarter, ended Oct. 3, 2021. The company’s gross profit came in at $1.06 billion. Its operating profit amounted to $574.83 million during the period.

Analysts expect HSY’s revenue for fiscal 2022 to be $9.3 billion, representing 4.7% growth year-over-year. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Also, its EPS is expected to grow 12.7% in fiscal 2021 and 6.5% next year. Its stock price has increased 6.8% over the past three months.

HSY’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has an A grade for Quality and a B grade for Stability.

In addition to the POWR Rating grades I have just highlighted, one can see HSY’s ratings for Growth, Value, Sentiment, and Momentum here. HSY is ranked #21 in the Food Makers industry.


KO shares were trading at $59.65 per share on Thursday afternoon, up $0.05 (+0.08%). Year-to-date, KO has gained 0.74%, versus a -9.31% rise in the benchmark S&P 500 index during the same period.


About the Author: Priyanka Mandal


Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...


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