Regarded as defensive investments, consumer staples stocks are generally safe bets in choppy markets. The flip side is that they frequently fall behind growth industries when times are good, and this perception became a reality over the past six months as the sector was down 2.3% while the S&P 500 was up 10%.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. With that said, here are two consumer stocks we think can generate sustainable market-beating returns and one that may face trouble.
One Consumer Staples Stock to Sell:
Coty (COTY)
Market Cap: $2.01 billion
With a portfolio boasting many household brands, Coty (NYSE: COTY) is a beauty products powerhouse spanning cosmetics, fragrances, and skincare.
Why Should You Dump COTY?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Demand will likely fall over the next 12 months as Wall Street expects flat revenue
- Performance over the past three years shows its incremental sales were much less profitable, as its earnings per share fell by 29.3% annually
At $2.31 per share, Coty trades at 7.1x forward P/E. If you’re considering COTY for your portfolio, see our FREE research report to learn more.
Two Consumer Staples Stocks to Watch:
Colgate-Palmolive (CL)
Market Cap: $69.97 billion
Formed after the 1928 combination between toothpaste maker Colgate and soap maker Palmolive-Peet, Colgate-Palmolive (NYSE: CL) is a consumer products company that focuses on personal, household, and pet products.
Why Do We Watch CL?
- Customer loyalty and massive revenue base of $20.8 billion makes it a household name that influences purchasing decisions
- Products command premium prices and result in a best-in-class gross margin of 60.4%
- Strong free cash flow margin of 17.8% enables it to reinvest or return capital consistently
Colgate-Palmolive is trading at $87.69 per share, or 22.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Philip Morris (PM)
Market Cap: $291.3 billion
Founded in 1847, Philip Morris International (NYSE: PM) manufactures and sells a wide range of tobacco and nicotine-containing products, including cigarettes, heated tobacco products, and oral nicotine pouches.
Why Is PM a Good Business?
- Unique products and pricing power are reflected in its best-in-class gross margin of 66.5%
- Highly efficient business model is illustrated by its impressive 36.5% operating margin
- PM is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Philip Morris’s stock price of $188.15 implies a valuation ratio of 21.4x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week - FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
