In this article, we will take a look at some of the best penny stocks across the consumer staples space.
On April 10, CNBC reported that consumer sentiment plunged to its lowest level in April, fueled by concerns about high inflation amid the ongoing conflict in the Middle East. As per a survey conducted by the University of Michigan, the geopolitical tensions have led to a sharp jump in energy and commodity prices. This caused the university’s headline consumer sentiment index to tumble to 47.6, a 10.7% drop compared to the prior month, also marking the lowest figure on record.
However, Joanne Hsu, the survey’s director, noted that these results are based on data collected prior to the ceasefire announced on April 7. Hence, there is a possibility of a reversal of the trend in the coming weeks as the peace talks advance.
Back in mid-March, the Managing Director from RBC Capital Markets, Nik Modi, reflected on how the ongoing situation could adversely affect the pricing power of many consumer staples businesses. Despite some short-term contractual hedges that these companies possess, they will eventually come under pressure due to higher operating costs. More importantly, it will be challenging for them to pass these costs on to the consumer in the current environment, where the companies are already exposed to volumetric pressure. Modi recommended a highly cautious approach in identifying consumer staples names that are more protected against such inflationary indicators.
With that background, let’s explore our 10 Best Consumer Staples Penny Stocks to Buy Now.
Our Methodology
To identify relevant stocks for this article, we screened U.S.-listed consumer staples companies with share prices below $5 and market capitalizations above $200 million. Also, we only shortlisted stocks with at least 10% upside potential, according to consensus, as of the April 17 close. Next, we selected 10 stocks with the highest upside and ranked them in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
10. Newell Brands Inc. (NASDAQ:NWL)
Newell Brands Inc. (NASDAQ:NWL) is one of the 10 best consumer staples penny stocks to buy now.
On April 16, Canaccord Genuity increased the price target on Newell Brands Inc. (NASDAQ:NWL) from $8 to $9, resulting in an adjusted upside potential of almost 108% at the prevailing level. The firm also maintained its Buy rating on the stock.
The price target adjustment was based on revisions to estimates before the first-quarter earnings. These incorporated analysis of sales data from Circana, Semrush searches, and social media engagement. Canaccord notes a good risk-to-reward ratio going into the earnings print, driven by strong Sharpie and Graco segments, better performance in Rubbermaid, and upside potential in the outdoor category.
Canaccord Genuity also highlighted Coleman’s new collapsible cooler as the top-selling product on Amazon. The rating supports the view that Newell Brands Inc. (NASDAQ:NWL) is currently one of the top penny stocks within the consumer staples category.
On April 9, RBC Capital reduced the price target on Newell Brands Inc. (NASDAQ:NWL) from $4.50 to $4 while reiterating a Sector Perform rating on the stock. The firm attributed this stance to the first-quarter earnings preview, which uncovered muted topline trends.
RBC Capital also noted inflationary pressures and rising commodity prices amid the Middle East conflict. Despite positive developments around the ceasefire, it anticipates the impact of such factors to persist in the foreseeable future.
Newell Brands Inc. (NASDAQ:NWL) designs, manufactures, and sells commercial and consumer goods. Its product portfolio includes cleaning and maintenance services, storage products, closet and garage organization goods, and vacuum sealing goods. It also offers stationery and art supplies, technical apparel, gourmet cookware and bakeware, labeling solutions, and baby care products.
