Regarded as defensive investments, consumer staples stocks are generally safe bets in choppy markets. The flip side is that they frequently fall behind growth industries when times are good, and this perception became a reality over the past six months as the sector was down 4.5% while the S&P 500 was up 10%.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. With that said, here is one consumer stock boasting a durable advantage and two we’re swiping left on.
Two Consumer Staples Stocks to Sell:
Central Garden & Pet (CENT)
Market Cap: $1.83 billion
Enhancing the lives of both pets and homeowners, Central Garden & Pet (NASDAQ: CENT) is a leading producer and distributor of essential products for pet care, lawn and garden maintenance, and pest control.
Why Do We Pass on CENT?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Sales are projected to be flat over the next 12 months and imply weak demand
- Underwhelming 8.5% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its falling returns suggest its earlier profit pools are drying up
Central Garden & Pet’s stock price of $31.80 implies a valuation ratio of 11.6x forward P/E. Check out our free in-depth research report to learn more about why CENT doesn’t pass our bar.
Mondelez (MDLZ)
Market Cap: $74.83 billion
Founded as Nabisco in 1903, Mondelez (NASDAQ: MDLZ) is a packaged snacks powerhouse best known for its Oreo, Cadbury, Toblerone, Ritz, and Trident brands.
Why Does MDLZ Fall Short?
- Falling unit sales over the past two years imply it may need to invest in product improvements to get back on track
- Efficiency has decreased over the last year as its operating margin fell by 5.2 percentage points
- Capital intensity has ramped up over the last year as its free cash flow margin decreased by 4.2 percentage points
Mondelez is trading at $58.13 per share, or 18.9x forward P/E. Read our free research report to see why you should think twice about including MDLZ in your portfolio.
One Consumer Staples Stock to Watch:
Colgate-Palmolive (CL)
Market Cap: $68.87 billion
Formed after the 1928 combination between toothpaste maker Colgate and soap maker Palmolive-Peet, Colgate-Palmolive (NYSE: CL) is a consumer products company that focuses on personal, household, and pet products.
Why Are We Fans of CL?
- Dominant market position is represented by its $20.1 billion in revenue, which gives it negotiating power with suppliers and retailers
- Unique products and pricing power result in a best-in-class gross margin of 60.3%
- CL is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
At $85.30 per share, Colgate-Palmolive trades at 22.5x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
