Consumer stocks remained in demand by many investors. As per the retail sales figure data, it was reported that the retail sales surged by 9% in March, which is the highest percentage in 10 months.
It is said that for the first time unemployment benefits were at the lowest levels. Experiencing all the things above, we consider the top consumer stocks being the most active today.
Before getting deeper into the consumer stocks, let’s take it at a glance.
What are Consumer Stocks?
Consumer stocks are basically a sector of stocks that includes companies that produce consumer staples.
Nowadays, every individual depends on consumer staples. This includes all the products that we use on a day to day life such as food, beverages, cleaning products, personal hygiene.
As these goods are used in day to day lives, these are purchased irrespective of the economic condition of the country. Because they are considered as the essential items.
There are different forms of consumer stocks. One form of the consumer is discretionary stocks.
These include hotels, apparels, restaurants etc. While normal consumer stocks provide essentials that are connected with the daily activities of an individual, the latter do not provide essential goods.
Instead, they offer services for consumer’s requirements rather than what they want.
Investor’s Attention to These Stocks
Investors are now paying attention to these stocks. If we take a look at the stock market, then the first quarter of the 2021 earnings season seems to be picking up speed. Stocks like HUL, ITC and Nestle have shown growth.
Investors focus on these stocks particularly because of the reason that they deal in essentials. The Covid-19 pandemic has not gone completely and hence investors prefer these consumer stocks which will not show a deep fall even if the situation gets worsened.
Overall, we find that investors are seeking to invest in consumer stocks as they are high in demand these days.
Benefits of Investing in Consumer Stocks
When it comes to investing in stocks, one of the main concerns that arrive in everyone’s mind would be the stability stocks hold during economic crises.
When it comes to consumer stocks, they are considered the safest instruments for investors as these essentials never go out of need. The demand for these goods rises during a time of crises.
Also, due to heavy demand by consumers, these companies generate consistent profits even in the time of weak economic conditions.
Another benefit of investing in such stocks is: these consumer stocks pay dividends to the stockholders. They are defensive enough to outperform other stocks even during bear markets. This is mainly due to the essential nature of consumer stocks.
For example, in the recent time of pandemic, numerous consumer stocks thrive as consumers tend to stock up on essentials.
This in return, increases the valuation of companies producing consumer products and provides investors with attractive returns.
Last but not the least, another major advantage of having such stocks is their stable revenues irrespective of the economic condition and challenges.
Here are the best consumer stocks that you should never miss in 2021
- HUL (Hindustan Unilever Limited)
HUL is the top giant and currently considered the leading company in the consumer goods market. With its great and outstanding financial performance over the last years, the company’s stocks still provide attractive returns to its shareholders.
Last month i.e in March, the company had recorded a 52 week high of Rs Rs 2614.30 and the lowest being Rs 1750. If we talk about the market size of HUL, then it is Rs 5,08,113.69 crore that proves the company can provide huge earnings to its shareholders in the future.
2. ITC (Indian Tobacco Company)
ITC is a renowned name in the FMCG sector in India. It’s a well-reputed tobacco company that diversified into different sectors including FMCG, paperboards, printing, personal care products, hotels, commodities, ghee, luxury chocolates, frozen food products and many more.
The company provides a huge dividend to its shareholders. The dividend yield of ITC is 4.33% and also holds liquid cash and liquid investment of Rs 35,600 Crores.
According to sources, ITC gains 62% of its revenue from the tobacco business with hotels providing the least of its revenue of 3.88%.
- Nestle India Limited
Nestle is an Indian subsidiary of the swiss based MNC. Bagged the third position after ITC, the company has a market capitalisation of Rs 1,59,155,52 Crores. Of total capitalisation, 40% of its revenue is generated from milk, followed by beverages which are 12%, 28% from dishes and the remaining 13% from chocolates and confectionaries.
Investors should not miss out on investing in Nestle as the company hits a high at Rs 18.369.95 and the lowest at Rs 12,200 over a span of 52 weeks.
From the above points, Nestle has turned out to be a smart investment choice.
Britannia is considered one of the oldest and top leaders of biscuit companies in India. It is also referred to as the powerhouse of the consumer goods sector. The company has a total of 21.7 lakh outlets in the country. If we talk about the popular brands of Britannia which are the first choice of every individual is Tiger, Good day, Nutri Choice, Milk Bikis and Amrie.
Investors also need to focus on Britannia as the company’s sales have grown at a CAGR of 8.10% and the PAT has grown at a CAGR of 20%.
The company recorded a 52 week high of Rs 4010.00 and 52 week low being Rs 21,00.
The market capitalisation of the company is Rs 89,582.63 Crores.
- Godrej Consumers Product Limited
The company is the market leader in hair colour and other segments. The company has recorded a 52 week high of Rs722.0 and a low at Rs 425.10. Godrej has a market capitalisation of Rs 66,624.36 Crore.
Another advantage of investing in Godrej stock is that the company also offers a dividend of 1.15% which is quite good as compared to the other investors.
The Bottom Line
Needless to say, consumer stocks perform best irrespective of the economic cycle and hence it would be ideal if you invest in these stocks. The companies are the top leaders in the FMCG sector and that’s the reason they never dissatisfy their customers.