1 Consumer Stock with Exciting Potential and 2 to Turn Down
Consumer staples are considered safe havens in turbulent markets due to their inelastic demand profiles. Unfortunately, the sector hasn't provided much protection lately as it pulled back by 9.7% over the past six months. This drop was worse than the S&P 500's 2% loss.
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 is one resilient consumer stock we've added to our cart and two we're passing on.
Market Cap: $22.07 billion
The classic red Heinz ketchup bottle's competitor, McCormick (NYSE:MKC) sells food-flavoring products like condiments, spices, and seasoning mixes.
Why Is MKC Not Exciting?
Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
Anticipated sales growth of 2.2% for the next year implies demand will be shaky
Capital intensity has ramped up over the last year as its free cash flow margin decreased by 5.4 percentage points
McCormick's stock price of $82.31 implies a valuation ratio of 26.3x forward price-to-earnings. If you're considering MKC for your portfolio, see our FREE research report to learn more.
Market Cap: $143.7 million
Known for its Optavia program that combines portion-controlled meal replacements with coaching, Medifast (NYSE:MED) has a broad product portfolio of bars, snacks, drinks, and desserts for those looking to lose weight or consume healthier foods.
Why Do We Pass on MED?
Products have few die-hard fans as sales have declined by 26.6% annually over the last three years
Sales were less profitable over the last three years as its earnings per share fell by 76.5% annually, worse than its revenue declines
Capital intensity has ramped up over the last year as its free cash flow margin decreased by 10.3 percentage points
At $13.48 per share, Medifast trades at 45.7x forward price-to-earnings. Read our free research report to see why you should think twice about including MED in your portfolio, it's free.
Market Cap: $101.5 billion
Best known for its Marlboro brand of cigarettes, Altria (NYSE:MO) offers tobacco and nicotine products.
Why Are We Fans of MO?
Differentiated product offerings are difficult to replicate at scale and lead to a best-in-class gross margin of 69.9%
Disciplined cost controls and effective management resulted in a strong two-year operating margin of 55.7%
Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Altria is trading at $60.10 per share, or 11.2x forward price-to-earnings. Is now the time to initiate a position? Find out in our full research report, it's free.
The Trump trade may have passed, but rates are still dropping and inflation is still cooling. Opportunities are ripe for those ready to act - and we're here to help you pick them.
Get started by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Insider
39 minutes ago
- Business Insider
Starship's 4th straight rocket explosion is the latest public setback for Musk's Mars dreams
SpaceX's flagship rockets keep blowing up. On Wednesday night, one of the Elon Musk-run space technology company's latest rockets erupted into an inferno on the launchpad. The explosion, which enveloped a portion of SpaceX's Starbase campus in Texas in fire and smoke, was meant to be a routine test ahead of a launch for the company's Starship program. The company plans to use Starship rockets — the successor to its Falcon models — to conduct missions to the moon, and eventually, Mars. Wednesday's explosion marks the fourth consecutive failure for SpaceX's Starship rockets this year. In May, a Starship rocket successfully made it through the Earth's atmosphere — but failed to release a payload of practice satellites into space and then spun out of control on its trip back to the planet. Starship rockets also exploded on two other trips this year. SpaceX has embraced its failures, using data collected from explosions and missteps to improve future products. Wednesday's explosion was intended to be a "static fire test," where the engines fire while the rocket is held on the launchpad with clamps, rather than launched into the atmosphere. Musk brushed off the mishap as "just a scratch." He said that preliminary data showed the failure was related to a container of pressurized nitrogen in the payload bay. "If further investigation confirms that this is what happened, it is the first time ever for this design," Musk wrote on X, formerly Twitter. A representative for SpaceX didn't immediately respond to Business Insider's request for comment. On X, the company said the test experienced "a major anomaly." It said all of the company's personnel were safe and accounted for. This year's string of failures marks a stark departure from last year, where the Starship program had better success, proving that its rockets could be reused and even land vertically after a trip to space. Although SpaceX is a private company, Musk had come under scrutiny from Tesla shareholders earlier this year over his role in President Donald Trump's administration. A number of major shareholders have complained that Musk had been spending less time operating the company while he oversaw the Department of Government Efficiency. SpaceX is heavily reliant on government contracts, and has one with NASA for the Starship to put astronauts on the moon by 2027, before Trump's term ends. Musk left the administration earlier this month and exchanged verbal volleys with Trump, accusing him without evidence of blocking the release of government documents related to the now-dead pedophile Jeffrey Epstein. The White House called Musk's comments "unfortunate." SpaceX typically conducts test launches frequently and has a high tolerance for failure, knowing the next test is just around the corner. The strategy has worked well for the company's Falcon rocket program, which in over a decade has launched hundreds of flights. On Monday, the company successfully launched a Falcon 9 rocket into space. The rocket sent more than two dozen Starlink satellites into orbit. "SpaceX's philosophy is 'fail fast, learn faster' and usually is undeterred by failures like this one," wrote space policy analyst Marcia Smith of the Starship explosion.
an hour ago
Some US restaurants and servers oppose Republicans' 'no tax on tips' budget proposal
Some segments of the U.S. restaurant industry don't support President Donald Trump's proposal to eliminate federal taxes on tips, saying it would help too few people and obscure bigger issues in the way tipped workers are paid. The Independent Restaurant Coalition, which represents nearly 100,000 restaurant and bars, has appealed to Congress to reconsider the proposal, which is part of the president's spending bill. Even some workers who rely on tips say they oppose making them tax-deductible. 'I think there's a huge hole in this concept of 'no tax on tips' because a lot of restaurant workers aren't receiving tips in the first place,' said Elyanna Calle, a bartender in Austin, Texas, and president of the Restaurant Workers United union. 'It's not helping most kitchen workers, and oftentimes those are the people who are being paid the least.' For now, making tips tax-free appears to have broad support among lawmakers. Both Trump and his Democratic rival in last year's U.S. presidential election, former Vice President Kamala Harris, campaigned on the concept. The House included it in a tax cuts package approved last month. The bill would eliminate federal income taxes on tips for people working in jobs that have traditionally received them as long as they make less than $160,000 in 2025. The Senate Finance Committee passed a modified version on Monday. Senators capped deductions at $25,000 and want to phase them out for individuals whose income exceeds $150,000. Eligibility would be based on earnings as of Dec. 31, 2024. Both the House and Senate committee measures would apply through the 2028 tax year. The Finance Committee specified that 'cash tips' qualify but said the term applied to tips paid in cash, charged to credit cards or received from other employees under a tip-sharing arrangement. Wary of wading into politics, many restaurant chains contacted by The Associated Press about tax-free tips didn't respond or referred questions to the National Restaurant Association, including Waffle House, The Cheesecake Factory, First Watch and the parent companies of Olive Garden, Applebee's and Chili's. The National Restaurant Association, a trade organization that represents nearly 500,000 U.S. restaurants and bars, applauded the House's passage of Trump's spending bill and said it wants to see tax-free tips. The association estimates the measure would benefit more than 2 million servers and bartenders. But the U.S. restaurant industry has more than 12 million workers, including dishwashers and chefs, according to government data. The Independent Restaurant Coalition says the 'no tax on tips' proposal leaves out too many of those workers. The coalition wants Congress to eliminate taxes on service charges, which are being used to compensate employees at an increasing number of restaurants. Around 15% of U.S. restaurants add some form of service charge to customers' bills, according to the National Restaurant Association. George Skandalos, a pizza restaurant owner in Moscow, Idaho, was tired of seeing servers count out hundreds of dollars of tips at the end of the night while people in the kitchen scrubbed the floor on their hands and knees. So he started experimenting with different compensation models. Skandalos tried pooling servers' tips and distributing them but ran into rules preventing that. He tried raising his menu prices and explaining that a percentage of each order was going to employee compensation, but customers didn't understand and kept tipping. Skandalos now has a gratuity-free policy at his restaurant, Maialina. He charges a 20% service fee that is distributed to all employees and helps pay for benefits like paid vacation and parental leave. The vast majority of customers appreciate the effort, he said. Skandalos said 'no tax on tips' doesn't acknowledge restaurants like his that are trying to distribute pay more equally. He would like to see service charges exempted from taxes. 'This bill is a very good start in terms of trying to leave more money in people's pocketbooks, but now let's finish what we started and make it a great thing for the restaurant industry overall,' he said. But Ted Pappageorge, the secretary-treasurer of the Culinary Workers Union Local 226 in Las Vegas, said restaurants should just pay their kitchen workers more to compensate for servers earning tips. ''No tax on tips' is an opportunity for Republicans and Democrats to deliver something to working class folks,' he said. Pappageorge wants Congress to take up a separate bill introduced by Nevada Democrat Steven Horsford that would eliminate taxes on tips but also require restaurants to pay workers at least the federal minimum wage of $7.25 per hour. In 43 states, restaurants are currently allowed to pay tipped workers as little as $2.13 per hour. Yolanda Garcia, a barista at Resorts World in Las Vegas and a member of the Culinary Workers Union, also supports Horsford's bill. Garcia said she makes $33,000 a year, including up to $600 per month in tips. Tips are never guaranteed, she said, but if they were tax-free, it would help make up for that uncertainty. 'It would help me get more groceries. Right now, the price of everything has gone up,' Garcia said. Calle, the Austin bartender and union leader, said she also benefits from tips, but they're inconsistent. She suspects tipping would decline if the tax-free provision passes, because customers will resent it. For Calle, the underlying problem that must be solved is low base pay.
an hour ago
Canadian tariffs on U.S. steel and aluminum could rise depending on trade talks, says Carney
TORONTO -- Canada's Prime Minister Mark Carney said Thursday he will impose new tariffs on U.S. steel and aluminum imports on July 21 depending the progress of trade talks with U.S. President Donald Trump. Carney, who met with Trump at the Group of Seven meetings in Alberta this week, reiterated Thursday that Canada and the U.S. "agreed to pursue negotiations toward a deal within the coming 30 days." 'We will review our response as the negotiations progress,' Carney said. He added: "In parallel, we must reinforce our strength at home – and safeguard Canadian workers and businesses from the unjust U.S. tariffs. That's why today we are announcing Canada will be introducing a series of countermeasures to protect Canadian steel and aluminum workers and producers. "First, Canada will adjust its existing counter-tariffs on U.S. steel and aluminum products on July 21 to levels consistent with progress made in the broader trading agreement with the United States.' Carney said Trump's trade war is running the risk of a global recession. 'The world is in the middle of a trade war and several wars, actual wars, including wars that can have quite significant implications for commodity prices and global growth,' said Carney, who led the central banks of both Canada and the United Kingdom. Trump has imposed 50% tariffs on steel and aluminum as well as 25% tariffs on autos. Trump is also charging a 10% tax on imports from most countries, though he could raise rates on July 9, after the 90-day negotiating period set by him would expire. Canada and Mexico face separate tariffs of as much as 25% that Trump put into place under the auspices of stopping fentanyl smuggling, through some products are still protected under the 2020 U.S.-Mexico-Canada Agreement signed during Trump's first term. Canada is the largest foreign supplier of steel, aluminum and uranium to the U.S. and has 34 critical minerals and metals that the Pentagon is eager for. Nearly $3.6 billion Canadian dollars ($2.6 billion) worth of goods and services cross the border each day. Canada is the top export destination for 36 U.S. states. 'We need to stabilize the trading relationship with the United States. We need to have ready access to U.S. markets,' Carney said. Trump announced with British Prime Minister Keir Starmer that they had signed a trade framework Monday that was previously announced in May. The trade framework included quotas to protect against some tariffs, but the 10% baseline would largely remain as the Trump administration is banking on tariff revenues to help cover the cost of its income tax cuts. Carney didn't say if he would sign a deal with the U.S. if any tariffs remain in place on Canada. auto sectors,' he said.
