Consumer staples will continue to outperform - Wells Fargo
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Wells Fargo thinks investors should continue to take refuge from market turmoil with consumer staples stocks. While the sector is on pace for the widest outperformance to the market in 14 years, the macro backdrop is said to still favor staples.
Despite the outperformance against the S&P 500 Index already in 2022, analyst Chris Carey and team said staples outperformance can sustain for a long stretch of time as investors ride out macroeconomic headwinds.
Per Wells Fargo, the history lesson is to own staples on the 'deceleration curve', then reconsider as global growth troughs and offense returns. Episodes of staples outperformance were seen in 2007, 2008, 2011, 2014, 2015, and 2018 - which were all years when slowing in global growth coincided with the staples outrunning the broad market.
Within the consumer staples sector, Wells Fargo has Overweight ratings on Edgewell Personal Care Company (EPC), Spectrum Brands Holdings (SPB), Scotts Miracle-Gro Company (SMG), Vita Coco (COCO), Keurig Dr Pepper (KDP), Coca-Cola (KO), Monster Beverage (MNST) and Constellation Brands (STZ).
A catch-all for consumer staples stock is the Consumer Staples Select Sector SPDR ETF (NYSEARCA:XLP). See top holdings.