Standing amid an unstable global economy and the roller-coaster ride the stock market has been on; investors are at a crossroads, wondering which path to take? The markets across the globe have been see-sawing in the face of a dwindling economic environment and devaluation of most currencies against the U.S. dollar.
The latest headlines from the global economic news columns highlighted China’s slowing growth rates, the recent fall in Chinese stock markets and various economic challenges facing the country. Further, the world’s second-largest economy sent shock waves around the world by its sudden decision to devalue the yuan, which worsened the economic picture worldwide.
This global turmoil has also impacted the otherwise resilient U.S. markets, which have been unstable for quite a while and declined to some extent following the slump in the Chinese economy. The Dow Jones (DIA) fell nearly 7.3%, while the S&P 500 (SPY) declined close to 5.6% in the past three months.
Although the major U.S. indices have turned south over the past few months, resulting in a slowdown in stock prices of most companies, we have identified three stocks from the consumer staples sector that have outperformed the major indices in the past three months.
The stocks in this sector have been performing reasonably well, driven by a moderate economic recovery in the U. S., improving job scenario, better business and renewed optimism as a result of the housing recovery. Also, lower fuel prices and rising wages have raised consumers’ disposable income.
In many cases, commodity costs have stabilized and this in turn, has improved profit margins for certain staples companies. The favorable margins should help offset some of the negative effect that unfavorable currency translations typically has on earnings.
3 Prominent Picks
Altria Group Inc. (MO – Analyst Report)
Altria Group is among the leading manufactures and sellers of cigarettes, smokeless products, and wine in the United States and internationally. The company has been able to maintain leading positions in cigarettes with Marlboro, machine-made large cigars with Black & Mild and smokeless tobacco with Copenhagen and Skoal.
Leave A Comment