TIts move in the year has been fast and furious, leaving even the most impatient investors a bit frustrated as we turn the page into the second half of 2022. The pockets of the market that did well during the upside over the past year have reversed course as new leaders have emerged. Sectoral rotation is on full display, with organizations abandoning growth and technology names and shifting to more defensive positions.
While the energy sector has been the hottest year to date, several energy companies have come under attack in recent weeks as prices have fallen and signs of peak inflation continue to appear. The energy and agriculture companies that led the market during the first half of the year are now in their own bear market, with most companies down more than 20% from their peak.
Not surprisingly, one of the sectors that has remained consistent in its performance through all the fluctuations is consumer goods. The SPDR ETF XLP Basic Consumer Goods segment is showing resilience this year as the overall market continues to correct. Several individual components within the XLP ETF have hit new heights this year, which is another sign of strength. Take a look at the relative performance of XLP in 2022:
Image source: StockCharts
Note that this relative outperformance is characterized by a steady uptrend and a pattern of higher tops. As investors, we want to target sectors, industry groups, and individual stocks that are outperforming the market. It is critical that we maintain maximum flexibility and adjust our approach according to what the market is doing. Rather than embarking on a quick reaction, it is important to keep an open mind about the future. Being prepared for a variety of outcomes can help us deal with this uncertain future.
The inventory we will analyze below makes up more than 2% of XLP’s total holdings. This long-term stock market winner is part of Zacks Food – Miscellaneous Industry, which currently ranks #1 in 32% of nearly 250 industry groups. Ranked in the top half of all Zacks ranked industries, we expect this group to outperform over the next three to six months. This group is down just 1.5% this year versus a 21% loss for the S&P 500 Index. By focusing on stocks in leading industries, we can significantly improve our investment success.
General Mills Corporation (GIS)
General Mills is a global manufacturer and marketer of branded consumer foods. The company sells products such as ready-to-eat cereals, yogurts, soups, candy and bread mixes, frozen pizza, and snack foods, as well as many organic items and pet foods through its retail stores. GIS also supplies its products to the food service and commercial baking sectors. Some of the company’s most well-known brands include Annie, Betty Crocker, Bisquik, Cheerios, Fruit by the Foot, Pillsbury, Total Waits, and Yoplait. General Mills was founded in 1866 and is headquartered in Minneapolis, Minnesota.
GIS has exceeded earnings estimates in three of the past four quarters. The company recently reported fiscal first-quarter earnings per share last week of $1.12 per share, a surprise 10.89% compared to a consensus estimate of $1.01 per share. The consumer food provider delivered a back-to-back surprise of average fourth-quarter earnings of 6.47%, helping the stock advance more than 27% in the past year. As we can see below, GIS has been the long-term winner in the market and has prevailed during many wars, recessions, bear markets and periods of high inflation that spanned several decades.
Image source: StockCharts
Analysts raised their full-year earnings estimates for GIS by 0.76% for the week. Zacks Consensus’ estimate for fiscal year 2023 EPS now stands at $4.00 per share, which translates to 1.52% growth year-over-year. Sales are expected to rise 1.92% to $19.36 billion.
Make sure to consider this constant consumer good as a candidate for your portfolio if you haven’t already.
Zacks Names “Single Best Pick to Double”
Out of thousands of stocks, 5 Zacks experts each chose their favorite to skyrocket +100% or more in the coming months. Of these five, Research Director Shiraz Mian chooses someone with the most explosive positive side of all.
It’s a little-known chemical company, up 65% from last year, but it’s still cheap. With continued demand, high earnings estimates for 2022, and $1.5 billion in share buybacks, retail investors can jump in at any time.
This company can rival or outperform other Zacks stocks that are set to double like Boston Beer which is up +143.0% in just over 9 months and NVIDIA which is booming +175.9% in one year.
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General Mills, Inc. (GIS): Free Stock Analysis Report
Consumer Goods Sector Select SPDR ETF (XLP): ETF Research Reports
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