In this article, we’ve used TipRanks’ comparison tool to check out three blue-chip consumer staple stocks – KO, WMT, and MDLZ – with a Wall Street consensus “Strong Buy” rating that can perform relatively well for a recession. When it comes to analyst price target upside potential, MDLZ tops the list, but let’s take a closer look at each stock.

Concerns about a 2023 recession are mounting, with hot CPI numbers arriving yesterday. Inflation data was only a little warmer, but that was enough to send the stock market as a whole down more than 4% on the day.

As rates continue to rise, many fear the soft landing will be harder to engineer. Fed-induced recessions can be painful, and while there’s still a chance a soft landing is in the cards, markets could start pricing in a harder landing with each hotter-than-expected CPI report. .

Now is not a good time to be a novice investor, but there are places to hide as the economy shifts into retreat mode. The consumer staples space is just a hiding place for those buffeted by the wild market swings we’ve seen in recent months.

Of course, even a defensive dividend-paying stock can take a beating when the primary emotion on Wall Street is fear. Either way, I think the following consumer staples stocks are worth re-examining ahead of a recession, the severity of which remains unknown.

Coca-Cola is one of Warren Buffett’s favorite long-term holdings. He will probably keep his shares for life. While Coke shares saw a bit of a chop in 2020 as restaurants closed and stopped serving Coca-Cola in the process, the beverage giant tends to be less affected by exogenous factors weighing on larger markets.

Unless there’s another wave of lockdowns (which is extremely unlikely), Coca-Cola looks poised to ramp up, even if the S&P 500 (SPX) stagnates or sags further in a bear market. The company begins to weather supply chain disruptions, inflation headwinds and labor issues. Indeed, these three headwinds have weighed on almost every business these days.

Although Coke delivered magnificent numbers in the second quarter, its rally has since run out of steam, now down about 9% from its all-time high just north of $67 per share. Dividend defensive stocks have become a bit overpriced as investors shifted funds from risk assets to risk assets for most of the year.

At the time of writing, Coke shares are trading at 27.6x earnings and 6.4x sales. Although such a multiple seems ridiculous to pay for an old company, I would say that in today’s difficult climate, the exorbitant price of entry is worth it for those looking for stability.

In the future, cola may begin to spread its wings further into other non-alcoholic beverage categories, including coffee and energy drinks. With such a stellar brand and impressive global reach, I think it might prove difficult to stop Coke in its tracks here.

What is the price target for KO stocks?

Wall Street continues to like Coke shares, with nine buys, three takes and a 15.6% upside for the coming year expected based on the average KO share price target of 70, $25.

Walmart is another staple consumer stock that can perform much better than the market during tough times. The company’s grocery business has really helped it weather inflationary headwinds over the past year. As a recession approaches, discretionary demand may decline, but Walmart’s staples business may begin to lift more weight.

As the tables turn and recession turns into expansion, Walmart will benefit from a slight increase in discretionary demand. Either way, the well-run big-box retailer appears well-equipped to thrive in all types of macro climates.

With a possible inventory glut over the next few months, markdowns and discounts could further squeeze margins. Either way, Walmart has already been through more than its fair share of transient headwinds. The company continues to adapt and move forward with investments in innovation. E-commerce bets and technology-driven efforts to improve supply chain efficiencies are expected to drive sustained margin growth.

In the meantime, Walmart must continue to swim against the tide. As we enter a year of recession, I expect Walmart could take share from rivals who fail to match the legendary retailer’s value proposition.

What is the target price for WMT shares?

At 26.3x earnings and 0.6x sales, Walmart is a glimmer of value. Wall Street is holding its own with Walmart, with 21 buys, seven takes and upside potential of 12.5% ​​for the year ahead based on the average WMT price forecast of $151.72.

Mondelez is the snack maker behind Cadbury, Oreo, Halls, Tang and many other popular consumer packaged products. The stock hasn’t gone anywhere in a hurry over the past three years. With stocks not too far off pre-pandemic levels, the value proposition for the confectionery business is enticing as we head into more difficult times.

Most of the snacks created by Mondelez are quite affordable. As consumers tighten up at the grocery aisle, snacks are less likely to be cut back, given that much of the food price inflation has been targeted at other fresh food categories.

Even if sales slow, don’t expect Mondelez to sacrifice margins to preserve revenue. Additionally, the company seems determined to reinvest to improve its snack moat. Indeed, it is difficult to compare to brands such as Oreo and Cadbury. The confectionery business can be quite enjoyable for incumbents. Ask Warren Buffett, who bought See’s Candies decades ago.

The stock is trading at 21.9x earnings and 2.8x sales – fairly reasonable for a quality commodity.

What is the target price for MDLZ stock?

Wall Street has a sweet tooth for Mondelez shares, with nine buys and one block awarded over the past three months. The average MDLZ stock forecast of $71.73 implies 19.1% upside potential.

Conclusion: analysts are the most bullish on MDLZ stock

Consumer staples stocks have become a bit more expensive due to higher volatility. Still, Wall Street loves the three names portrayed in this piece. Mondelez takes the cake for having the most upside potential for the coming year.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.