Regarded as defensive investments, consumer staples stocks are generally safe bets in choppy markets. Unfortunately, the sector hasn’t provided much protection lately as it pulled back by 15.2% over the past six months. This performance was noticeably worse than the S&P 500’s 2.4% loss.
Some companies can buck this trend, but the odds aren’t great for the ones we’re analyzing today. Taking that into account, here are three consumer stocks that may face trouble.
Mission Produce (AVO)
Market Cap: $726.4 million
Founded in 1983 in California, Mission Produce (NASDAQ: AVO) grows, packages, and distributes avocados.
Why Do We Avoid AVO?
- Smaller revenue base of $1.31 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Gross margin of 11.2% is an output of its commoditized products
- Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its falling returns suggest its earlier profit pools are drying up
At $10.47 per share, Mission Produce trades at 9x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why AVO doesn’t pass our bar.
TreeHouse Foods (THS)
Market Cap: $1.14 billion
Whether it be packaged crackers, broths, or beverages, Treehouse Foods (NYSE: THS) produces a wide range of private-label foods for grocery and food service customers.
Why Is THS Risky?
- Falling unit sales over the past two years imply it may need to invest in product improvements to get back on track
- Commoditized products, bad unit economics, and high competition are reflected in its low gross margin of 16.5%
- Underwhelming 1.4% return on capital reflects management’s difficulties in finding profitable growth opportunities
TreeHouse Foods is trading at $22.59 per share, or 11.6x forward P/E. To fully understand why you should be careful with THS, check out our full research report (it’s free).
Zevia (ZVIA)
Market Cap: $187 million
With a primary focus on soda but also a presence in energy drinks and teas, Zevia (NYSE: ZVIA) is a better-for-you beverage company.
Why Does ZVIA Worry Us?
- Lackluster 2% annual revenue growth over the last three years indicates the company is losing ground to competitors
- Issuance of new shares over the last three years caused its earnings per share to fall by 27.1% annually while its revenue grew
- Cash-burning history makes us doubt the long-term viability of its business model
Zevia’s stock price of $2.87 implies a valuation ratio of 1.3x forward price-to-sales. Read our free research report to see why you should think twice about including ZVIA in your portfolio.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
