Consumer spending habits are evolving under the weight of rising costs and economic uncrtainty, prompting investors to reevaluate where they place their confidence. In this climate, companies that supply essential goods—groceries, household necessities, and personal care products—are drawing renewed interest. These firms operate in sectors where demand holds steady regardless of broader financial trends, offering a measure of stability in unpredictable times. Kroger interim CEO Ron Sargent recently underscored this shift during the company’s Q1 earnings call, noting that “customers are managing their budgets carefully and shifting toward value-oriented items, including private-label and promotional products.” His remarks echo a growing consensus among retail leaders: consumers aren’t cutting back on what they need—they’re being smarter about how they buy it.
This renewed focus on value plays directly into the strengths of the consumer defensive sector. Firms with established distribution networks, trusted brands, and operational discipline are well-positioned to meet current demand patterns while protecting margins. As a result, investors are viewing these businesses not just as defensive plays, but as steady performers in a market searching for balance. For those looking to shield their portfolios while still participating in long-term growth, the case for consumer defensive stocks is gaining strength.
Aerial view of a shopping mall bustling with consumers.
Our Methodology
We sifted through the Finviz stock screener to compile a list of the top consumer defensive stocks that had a average upside potential of over 10% as of June 26. The stocks are ranked in ascending order of their average upside potential. We’ve also added the hedge fund sentiment for each stock, which was sourced from Insider Monkey’s database, as of Q1 2025. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 1000 elite money managers.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Consumer Defensive Stocks to Buy Now
10. The J.M. Smucker Company (NYSE:SJM)
Upside Potential: 12.66%
Number of Hedge Fund Holders: 37
The J.M. Smucker Company (NYSE:SJM) is one of 10 consumer defensive stocks to buy now. Morgan Stanley revised its outlook on The J.M. Smucker Company (NYSE:SJM) following the company’s fiscal fourth-quarter earnings, lowering the price target to $115 from $124 while maintaining an Overweight rating. The move comes after the company posted quarterly results and issued guidance that fell short of analysts’ expectations, prompting concerns about profitability in several key segments.
The firm highlighted a combination of challenges contributing to a projected low-double-digit decline in FY26 earnings. These include weaker-than-expected performance in its coffee division, added pressure from tariffs, and elevated marketing expenditures. Ongoing underperformance from the Hostess acquisition further weighed on the forward outlook. Despite the disappointing guidance, Morgan Stanley analysts noted the company’s forecast appears conservative in several areas. They added that J.M. Smucker’s valuation remains at the lower end of its peer group in the packaged food space, particularly among center-store staples.
The Overweight rating suggests Morgan Stanley continues to see longer-term potential in the stock, underpinned by cost discipline, category resilience, and brand equity across its core offerings. However, the path forward will require improved execution, particularly in coffee and snacking, and a clearer rebound in earnings momentum.
9. The Kraft Heinz Company (NASDAQ:KHC)
Upside Potential: 13.13%
Number of Hedge Fund Holders: 46
The Kraft Heinz Company (NASDAQ:KHC) is one of 10 consumer defensive stocks to buy now. Goldman Sachs has raised its rating on The Kraft Heinz Company (NASDAQ:KHC) to Neutral from Sell, lifting its price target to $27 from $25. The upgrade reflects what the firm describes as a more balanced risk/reward outlook, even as near-term sales pressures persist. In a note to investors, Goldman analysts acknowledged ongoing concerns, including continued softness in scanner data and declining sales and market share across several of Kraft Heinz’s core categories. These challenges, they noted, remain central to the company’s struggle to regain momentum in a competitive consumer environment.
However, the firm pointed to Kraft Heinz’s portfolio of iconic brands as a key asset. With the company recently announcing a review of strategic alternatives, Goldman sees the potential for shareholder-accretive actions that could drive future upside. While details of any possible actions remain unclear, the review signals management’s willingness to pursue structural changes to unlock value. Despite the cautious stance on fundamentals, Goldman now views the downside risk as more limited. As the company evaluates options and works to stabilize performance, the market may begin to respond more favorably to clearer signs of a turnaround.
