In this article, we will be looking at 11 best FMCG stocks to buy now.
The global sector continued to thrive amidst the global pandemic. According to NCSolutions data published on January 2021, as the pandemic was in full swing, consumer packaged goods (CPG) spending grew 19% compared to 2019. Today, as a result of vaccines and a broader reopening of the economy, consumer goods consumption is far above pre-pandemic levels.
One of the drivers of growth in the fast-moving consumer goods sector is a rise in consumer expenditure fueled by government stimulus and increasing disposable income. According to an industry outlook published by Allied Market Research, the global FMCG market is expected to reach $15.3 trillion by 2025, rising at a compound annual growth rate (CAGR) of 5.4% from 2018 to 2025.
Some of the biggest FMCG companies including The Procter & Gamble Company (NYSE: PG), The Coca-Cola Company (NYSE: KO), Colgate-Palmolive Company (NYSE: CL) and Pepsico, Inc. (NYSE: PEP) have increased multi-channel sales and continue to ride the wave of e-commerce sales in the post-pandemic era. Some of the biggest FMCG retailers like Walmart Inc. (NYSE: WMT) and The Home Depot, Inc. (NYSE: HD) embraced digitalization to reach out to customers who are stuck at home. Walmart Inc. (NYSE: WMT) utilizes automated machines to prepare online grocery orders for customers, whereas The Home Depot, Inc. (NYSE: HD) has launched mobile apps for curbside pickup services.
Investing is becoming difficult by the day, even for smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Our Methodology
Insider Monkey tracks data of about 873 hedge funds, which we have used to pick the FMCG stocks popular among hedge funds. We also chose stocks with a positive analyst rating, solid fundamentals, and growth catalysts. With this context in mind, here is our list of the 11 best FMCG stocks to buy now.
Best FMCG Stocks To Buy Now
11. Nomad Foods Limited (NYSE: NOMD)
Number of Hedge Fund Holders: 26
Nomad Foods Limited (NYSE: NOMD) ranks 11th on the list of 11 best FMCG stocks to buy now. The frozen food company was founded in 2015. Nomad Foods Limited owns notable brands such as Aunt Bessie’s, Birds Eye, La Cocinera, and Belviva.
In 2020, Nomad Foods Limited acquired Fortenova’s Frozen Food Business Group (FFBG). The acquisition of FFBG expands the company’s portfolio into interesting new areas and creates an exciting new ice cream category adjacency.
By the end of the second quarter of 2021, 26 hedge funds out of the 873 tracked by Insider Monkey held stakes in Nomad Foods Limited worth roughly $298 million. This is compared to 25 hedge funds in the previous quarter with a total stake value of around $324 million.
FAM Funds mentioned Nomad Foods Limited in its Q4 2020 investor letter:
“The proceeds(from a sold equity) were primarily invested into a new idea — Nomad Foods (NOMD), a producer of branded frozen food products in Europe. Product categories include fish, vegetables, and meat substitutes. Management’s plan is to continually improve the brands they control while seeking opportunities to buy and upgrade similar companies. In the past, key members of senior management pursued this strategy at other businesses and created significant returns for shareholders. As COVID-19 rolled across Europe, Nomad became one of the few beneficiaries of the pandemic as consumers stopped visiting restaurants and increasingly ate at home.”
10. Tyson Foods, Inc. (NYSE: TSN)
Number of Hedge Fund Holders: 33
Tyson Foods, Inc. (NYSE: TSN) ranks 10th on the list of 11 best FMCG stocks to buy now. The Arkansas-based multinational food company owns notable brands including Hillshire Farm, BallPark, Wright, Aidells, and State Fair.
On August 10th, BMO Capital analyst Kenneth Zaslow raised his price target on Tyson Foods, Inc. to $95 per share from $84 per share and kept his Outperform rating on the shares.
The company has a market cap of $29.01 billion and currently offers a dividend yield of 2.24%. In the third quarter of 2021, Tyson Foods, Inc. reported an EPS of $2.70, beating estimates by $1.03.
By the end of the second quarter of 2021, 33 hedge funds out of the 873tracked by Insider Monkey held stakes in Tyson Foods, Inc. worth approximately $743 million. This is compared to 28 hedge funds in the previous quarter with a total stake value of roughly $761 million.
9. General Mills, Inc. (NYSE: GIS)
Number of Hedge Fund Holders: 37
General Mills, Inc. (NYSE: GIS) ranks 9th on the list of 11 best FMCG stocks to buy now. The multinational food and retail firm was founded in 1928. General Mills, Inc. has over 100 brands including Lucky Charms, Old El Paso, Cheerios, Trix, and Medal Flour.
On August 28th, General Mills, Inc. was initiated at a Neutral rating with a $70 price target from Citi analyst Wendy Nicholson. The analyst believes the valuation of General Mills, Inc. reflects the company’s strong performance.
The company has a market cap of $36.13 billion and currently offers a dividend yield of 3.42%.
By the end of the second quarter of 2021, 37 hedge funds out of the 873 tracked by Insider Monkey held stakes in General Mills, Inc. worth approximately $744 million. This is compared to 31 hedge funds in the previous quarter with a total stake value of around $797 million.
8. Costco Wholesale Corporation (NYSE: COST)
Number of Hedge Fund Holders: 54
Costco Wholesale Corporation (NYSE: COST) is a retail warehouse company based in Washington. Costco has more than 795 locations worldwide and carries over 3,700 products. Costco Wholesale Corporation ranks 8th on the list of 11 best FMCG stocks to buy now.
In 2020, Costco Wholesale Corporation acquired delivery and logistics provider Innovel Solutions in a $1 billion deal. Innovel Solutions delivers appliances, furniture, beds, televisions, grills, patio, fitness equipment, and wine cellars.
This August, Wells Fargo analyst Edward Kelly raised the price target of Costco Wholesale Corporation to $480 per share from $415 per share and kept his Overweight rating on the stock. Kelly believes that Costco continues to demonstrate the flexibility and robustness of its approach with a strong performance in 2020.
The company has a market cap of $201.11 billion and currently offers a dividend yield of 0.69%. In the third quarter of 2021, Costco Wholesale Corporation reported an EPS of $2.75, beating estimates by $0.47. In the third quarter of 2021, the revenue of Costco Wholesale Corporation came in at $45.28 billion, up 21.7% year-over-year and beating estimates by $1.4 billion.
Just like The Procter & Gamble Company, The Coca-Cola Company, Colgate-Palmolive Company, Pepsico, Inc., Walmart Inc., and The Home Depot, Inc., Costco Wholesale Corporation is one of the best FMCG stocks to buy now
By the end of the second quarter of 2021, 54 hedge funds out of the 873 tracked by Insider Monkey held stakes in Costco Wholesale Corporation worth approximately $4.32 billion. This is compared to 56 hedge funds in the previous quarter with a total stake value of approximately $4.01 billion.
ClearBridge Investments mentioned Costco Wholesale Company in its Q1 2021 investor letter:
“To take a more discretionary stance in retailing and make room for our additional purchases where we see better opportunities, we closed our position in Costco Wholesale. Costco was a big winner during the most restrictive periods of the COVID-19 lockdowns with its focus on staples, larger basket size, necessities, and bulk items, and it remains an exceptional retailer in its category, with a sticky subscription base and non-U.S. growth ahead. However, the company is facing very tough comparisons as well as margin pressure in its core business and we believe its valuation has become stretched.”
7. Colgate-Palmolive Company (NYSE: CL)
Number of Hedge Fund Holders: 58
Colgate-Palmolive Company ranks 7th on the list of 11 best FMCG stocks to buy now. The Colgate-Palmolive Company is a multinational consumer goods conglomerate founded in 1806. The corporation has operations in over 200 countries and markets household and commercial products to its consumers.
In 2020, Colgate-Palmolive Company acquired the oral care brand Hello Oral Care. Hello Oral Care has a product line that includes toothbrushes, mouthwash, floss, and hemp and charcoal-infused lines.
On June 6th, Credit Suisse analyst Kaumil Gajrawala upgraded his rating on Colgate-Palmolive Company from Neutral to Outperform with a price target of $95 per share. Gajrawala believes Colgate-Palmolive Company is well-positioned to deal with the sharpest inflation rate in a decade.
The company has a market cap of $66.11 billion and currently offers a dividend yield of 2.30%. In the second quarter of 2021, Colgate-Palmolive Company reported an EPS of $0.80, meeting estimates. The company reported second-quarter revenue of $4.26 billion, up 9.5% year-over-year and beating estimates by $15.21 million. Shares of Colgate-Palmolive Company gained 0.27% in the past twelve months.
Just like The Procter & Gamble Company, The Coca-Cola Company, Pepsico, Inc., Walmart Inc., and The Home Depot, Inc., Colgate-Palmolive Company is one of the best FMCG stocks to buy now
By the end of the second quarter of 2021, 58 hedge funds out of the 873 tracked by Insider Monkey held stakes in Colgate-Palmolive Company worth roughly $2.36 billion. This is compared to 48 hedge funds in the previous quarter with a total stake value of approximately $2.30 billion.
First Eagle Investment Management mentioned Colgate-Palmolive Company in its Q1 2021 investor letter:
“The leading detractors in the quarter (included) Colgate-Palmolive Company. After a strong 2020 fueled in part by lockdown-driven demand, consumer staples stocks generally cooled during the first quarter as investors shifted attention to the more economically sensitive areas of the market likely to benefit from re-openings and improved discretionary spending. The effects of this rotation could be seen in the share price underperformance of names like Colgate-Palmolive.”
6. The Coca-Cola Company (NYSE: KO)
Number of Hedge Fund Holders: 62
Ranking 6th on the list of 11 best FMCG stocks to buy now is The Coca-Cola Company. The Georgia-based beverage company has over 200 brands including Coca-Cola, Diet Coke, Coke Zero, Sprite, Fanta, and Dasani.
In 2020, The Coca-Cola Company fully acquired ultrafiltered milk manufacturer Fairlife. The acquisition will help the company meet the needs of its rapidly evolving consumer base. Fairlife will continue to function as a separate company with headquarters in Chicago.
This July 22nd, Truist raised the price target of The Coca-Cola Company to $65 per share from $60 per share and kept its Buy rating on the stock. Analyst Bill Chappell mentioned that the company is part of the reopening trade.
The company has a market cap of $243.63 billion and currently offers a dividend yield of 2.98%. In the second quarter of 2021, The Coca-Cola Company reported an EPS of $0.68, beating estimates of $0.12. In the second quarter of 2021, the company reported revenue of $10.13 billion, up 42% year-over-year and beating estimates by $823.11 million. Following solid quarterly results, The Coca-Cola Company raised its FY2021 adjusted EPS growth view to around 13%-15%.
Just like The Procter & Gamble Company, Colgate-Palmolive Company, Pepsico, Inc., Walmart Inc., and The Home Depot, Inc., The Coca-Cola Company is one of the best FMCG stocks to buy now
By the end of the second quarter of 2021, 62 hedge funds out of the 873 tracked by Insider Monkey held stakes in The Coca-Cola Company worth roughly $24.96 billion. This is compared to 61 hedge funds in the previous quarter with a total stake value of around $24.90 billion.
5. The Home Depot, Inc. (NYSE: HD)
Number of Hedge Fund Holders: 64
Ranking 5th on the list of 11 best FMCG stocks to buy now is The Home Depot, Inc.. The company was founded in 1978 and operates over 2,312 branches worldwide. The Home Depot, Inc. is a home improvement retailer that markets consumer needs for building materials, home decor, and garden supplies.
In 2020, The Home Depot, Inc. acquired maintenance, repair, and operations product provider HD Supply. The acquisition of HD Supply establishes the company as a leader in the highly fragmented MRO business.
Credit Suisse analyst Lavesh Hemnani raised the price target on The Home Depot, Inc. from $319 per share to $330 per share this May, while keeping his Outperform rating on the stock.
The company has a market cap of $348.47 billion and currently offers a dividend yield of 2.01%. In the second quarter of 2021, The Home Depot, Inc. reported an EPS of $4.53, beating estimates by $0.10. The company’s second-quarter revenue came in at $41.12 billion, up 8.1% year-over-year and beating revenue estimates by $380.39 million.
By the end of the second quarter of 2021, 64 hedge funds out of the 873 tracked by Insider Monkey held stakes in The Home Depot, Inc. worth roughly $4.17 billion. This is compared to 68 hedge funds in the previous quarter with a total stake value of approximately $4.35 billion.
Nelson Capital Management mentioned The Home Depot, Inc. in its Q2 2021 investor letter:
“In the consumer discretionary sector, we trimmed pandemic winners in favor of companies we believe will outperform in a recovery period. We also trimmed our position in Home Depot (tkr: HD), as it will be challenged by tough comparable statistics, supply chain issues, and rising commodity costs.”
4. Pepsico, Inc. (NYSE: PEP)
Number of Hedge Fund Holders: 66
Pepsico, Inc. ranks 4th on the list of 11 best FMCG stocks to buy now. The multinational food and beverage company is based in New York and was founded in 1898. Pepsico, Inc. operates over 300 manufacturing plants worldwide.
In 2020, Pepsico, Inc. acquired energy drink maker Rockstar Energy Beverages for $3.86 billion. In April 2021, Rockstar Energy Beverages introduced its new packaging, elevating the brand and giving the energy drink a new visual identity in the international market.
This July, Wells Fargo analyst Chris Carey raised his price target on shares of Pepsico, Inc. to $160 per share from $147 per share and kept his Equal Weight rating on the stock. Carey believes the company’s second-quarter results were above expectations.
The company has a market cap of $218.17 billion and currently offers a dividend yield of 2.72%. In the second quarter of 2021, Pepsico, Inc. reported an EPS of $1.72, beating estimates by $0.17. The company’s second-quarter revenue came in at $19.22 billion, up 20.5% year-over-year and beating estimates by $1.27 billion.
By the end of the second quarter of 2021, 66 hedge funds out of the 873 tracked by Insider Monkey held stakes in Pepsico, Inc. worth roughly $5.19 billion. This is compared to 61 hedge funds in the previous quarter with a total stake value of approximately $4.88 billion.
3. Target Corporation (NYSE: TGT)
Number of Hedge Fund Holders: 66
Ranking 3rd on the list of 11 best FMCG stocks to buy now is Minnesota-based American retails giant Target Corporation (NYSE: TGT). The company first opened its discount store in 1962. Today, Target Corporation has over 1,844 stores throughout the United States.
In 2020, Target Corporation announced plans of acquiring same-day delivery tech Deliv. Target will use Deliv in its research and development efforts to improve the delivery process.
Baird analysts raised the price target of Target Corporation to $285 per share from $250 per share on August 19th and kept his Outperform rating on the stock.
The company has a market cap of $123.65 billion and currently offers a dividend yield of 1.43%. In the second quarter of 2021, Target Corporation reported an adjusted EPS of $3.64, beating estimates by $0.11. The company’s second-quarter revenue came in at $25.16 billion, up 9.5% year-over-year and beating estimates by $127.88 million. Shares of Target Corporation gained 40.25% year-to-date and 62.62% in the last twelve months.
Nelson Capital Management mentioned Target Corporation in its Q2 2021 investor letter:
“We added Target (tkr: TGT) to our consumer staples sector. Target offers a broad array of products in owned and known brand items at affordable prices. Its omnichannel fulfillment centers allow customers to receive their items via in-store pickup, curbside pickup, same-day shipping, and regular shipping while simultaneously reducing operating costs. With a significantly lower valuation than peers and a unique operating strategy, Target is an attractive holding.”
2. The Procter & Gamble Company (NYSE: PG)
Number of Hedge Fund Holders: 68
Ranking 2nd on the list of 11 best FMCG stocks to buy now is The Procter & Gamble Company. The Ohio-based multinational consumer goods corporation was founded in 1837. The company has over 65 individual brands including Pampers, Ariel, Safeguard, Oral-B, among others.
In April 2020, The Procter & Gamble Company expanded its Australian presence by acquiring supplement producer Voost. The Procter & Gamble Company intends to expand Voost’s range of vitamins, minerals, and supplements.
This August, Truist analyst Bill Chappell raised the price target of The Procter & Gamble Company to $145 per share from $140 per share and kept his Hold rating on the stock, highlighting solid Q4 results and FY2022 guidance.
The company has a market cap of $350.40 billion and currently offers a dividend yield of 2.41%. In the second quarter of 2021, The Procter & Gamble Company reported an EPS of $1.13, beating estimates by $0.04. The company’s fourth-quarter revenue came in at $18.95 billion, beating estimates of $569.63 million.
By the end of the second quarter of 2021, 68 hedge funds out of the 873 tracked by Insider Monkey held stakes in The Procter & Gamble Company worth roughly $6.93 billion. This is compared to 70 hedge funds in the previous quarter with a total stake value of approximately $8.53 billion.
1. Walmart Inc. (NYSE: WMT)
Number of Hedge Fund Holders: 71
Topping the list of 11 best FMCG stocks to buy now is Arkansas-based retails corporation Walmart Inc.. Walmart Inc. is one of the fastest moving consumer goods companies and operates over 10,500 stores in 24 countries.
In July, Walmart Inc. announced a partnership with consumer goods and supply chain robotics and automation company Symbotic.
Cowen analyst Oliver Chen recently kept an Outperform rating on Walmart Inc. and raised the firm’s price target to $175 per share from $170 per share.
The company has a market cap of $421.58 billion and currently offers a dividend yield of 1.46%. In the second quarter of 2021, Walmart Inc. reported an EPS of $1.78, beating estimates by $0.21. The company’s second-quarter revenue came in at $139.87 billion, up 2.4% year-over-year and beating estimates by $3.87 billion.
By the end of the second quarter of 2021, 71 hedge funds out of the 873 tracked by Insider Monkey held stakes in Walmart Inc. worth roughly $8.04 billion. This is compared to 58 hedge funds in the previous quarter with a total stake value of approximately $5.88 billion.
You can also take a look at 12 Best Artificial Intelligence Stocks To Invest In Right Now and 10 Best Consumer Staple Stocks to Buy Now
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This article is originally published at Insider Monkey.
