Consumer stocks have been quietly performing well in the first quarter of 2019, as investors have been focusing on cyclical sectors like technology and industrials. However, recent developments have shifted attention towards defensive stocks as trade tensions between the United States and the European Union have escalated. President Trump’s consideration of imposing retaliatory tariffs on EU goods and the International Monetary Fund’s downgrade of global growth forecasts have raised concerns about a slowdown in economic growth.
For investors looking to protect themselves in a “risk-off” market environment, three stocks have shown strength amidst the selling pressure in other sectors. Let’s take a closer look at each stock and discuss potential trading strategies.
1. Campbell Soup Company (CPB):
Campbell Soup Company, with a market capitalization of $11.89 billion, is a well-known manufacturer of convenience food products, particularly soup. Despite facing challenges in the soup market, the company has diversified its portfolio by acquiring Snyder’s-Lance, increasing its presence in the snack market. Campbell Soup has consistently exceeded analysts’ earnings expectations and offers an attractive 3.72% dividend yield. The stock is up 20.76% year-to-date, outperforming the S&P 500 Index.
After breaking above a downtrend line on increased volume, Campbell Soup shares may be indicating a new uptrend. Traders considering a long position should use a trailing stop to protect profits and set an initial stop-loss order below the 200-day simple moving average.
2. Monster Beverage Corporation (MNST):
Monster Beverage Corporation develops and sells energy drinks, with a majority of its revenue coming from the United States. The company has recently expanded its lawsuit against a competitor and is expected to report strong sales growth in the upcoming earnings release. Trading at $54.69 with a market cap of $29.71 billion, Monster stock is up 7.82% as of April 10, 2019.
Monster shares have retraced towards key support levels but have shown signs of further upside potential. Traders can manage risk by setting a stop below recent lows and targeting resistance levels around $60.
3. The J. M. Smucker Company (SJM):
The J. M. Smucker Company, with a market value of $13.59 billion, manufactures and markets branded food and beverage products globally. The company’s pet food and coffee segments drive a significant portion of its revenue, with expectations of sales growth in fiscal 2019. Credit Suisse recently upgraded Smucker stock, citing improved earnings potential. With a dividend yield of 2.85% and a YTD return of 28.71%, Smucker stock has seen significant gains.
Smucker’s stock has entered bull market territory, with technical indicators suggesting a new uptrend. Traders can set profit targets near previous swing highs and should keep a tight stop due to the stock’s overbought conditions.
In conclusion, defensive consumer stocks like Campbell Soup, Monster Beverage, and The J. M. Smucker Company have shown resilience in the face of market volatility. Investors looking to protect their portfolios in uncertain times may find these stocks appealing for their stability and potential for growth. The Benefits of Regular Exercise
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