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 4.8% while the S&P 500 was up 3.1%.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. Keeping that in mind, here is one consumer stock boasting a durable advantage and two we’re swiping left on.
Two Consumer Staples Stocks to Sell:
Celsius (CELH)
Market Cap: $11.13 billion
With its proprietary MetaPlus formula as the basis for key products, Celsius (NASDAQ: CELH) offers energy drinks that feature natural ingredients to help in fitness and weight management.
Why Does CELH Fall Short?
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 5.9 percentage points
- Free cash flow margin dropped by 4.8 percentage points over the last year, implying the company became more capital intensive as competition picked up
- ROIC of 2.5% reflects management’s challenges in identifying attractive investment opportunities
Celsius’s stock price of $43.08 implies a valuation ratio of 26.2x forward P/E. Check out our free in-depth research report to learn more about why CELH doesn’t pass our bar.
Darling Ingredients (DAR)
Market Cap: $8.23 billion
Turning what others consider waste into valuable resources, Darling Ingredients (NYSE: DAR) collects and transforms animal by-products, used cooking oil, and other bio-nutrients into valuable ingredients for food, feed, fuel, and industrial applications.
Why Is DAR Not Exciting?
- Products aren't resonating with the market as its revenue declined by 2.1% annually over the last three years
- Inability to adjust its cost structure while its revenue declined over the last year led to a 3.7 percentage point drop in the company’s operating margin
- Earnings per share have contracted by 41.3% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
At $51.90 per share, Darling Ingredients trades at 16.8x forward P/E. If you’re considering DAR for your portfolio, see our FREE research report to learn more.
One Consumer Staples Stock to Watch:
WD-40 (WDFC)
Market Cap: $3.10 billion
Short for “Water Displacement perfected on the 40th try”, WD-40 (NASDAQ: WDFC) is a renowned American consumer goods company known for its iconic and versatile spray, WD-40 Multi-Use Product.
Why Should WDFC Be on Your Watchlist?
- Products command premium prices and result in a top-tier gross margin of 54.5%
- Robust free cash flow margin of 12.6% gives it many options for capital deployment
- Industry-leading 26.2% return on capital demonstrates management’s skill in finding high-return investments, and its returns are growing as it capitalizes on even better market opportunities
WD-40 is trading at $229.96 per share, or 38.1x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
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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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
