The consumer staple stocks are deserving of more respect, even as the broader TSX Index looks to make a run for those seemingly elusive all-time highs. Indeed, the TSX has mostly sat out the year-to-date run in the S&P 500 and Nasdaq 100. Though the only thing that seems investable is high-tech issues, I’d argue that the neglected consumer staples plays could pay literal dividends once the next inevitable correction (or perhaps a recession-driven pullback) has a chance to rock investor sentiment.
Indeed, corrections can happen, even when all is well, and it seems like things can only improve over time. With the 2024 U.S. presidential election up ahead (what would happen to stocks in the event of a Trump victory?) and numerous other unknowns to keep on our radars, it seems only prudent to have a backup plan, with safety stocks that can continue to gain, even when the rest of the market falls.
For now, I view the TSX Index as quite rich in value stocks relative to most other global markets. In this piece, we’ll have a closer look at two of the cheaper, unloved staples that I believe ought to be considered a staple in any diversified portfolio!
Jamieson Wellness
Jamieson Wellness (TSX: JWEL) is a well-run vitamin and supplement maker that’s attempting to come back after a steady multi-year decline. The stock, which is now up 28% from its lows, just south of $24 per share, seems like an intriguing comeback candidate for 2024, as the company looks to ride higher on the back of its latest robust quarterly result.
At 28.0 times trailing price to earnings (P/E), investors aren’t paying too high a price for one of the “growthiest” Canadian mid-cap consumer staples in the health and wellness space right now. Of course, health and wellness represent powerful secular tailwinds — one that could help power shares back to new heights. As Canadian consumers begin trading up to branded products again, I suspect JWEL stock could be at new heights in less than a year.
Of course, Jamieson is more than just a Canadian story, with the most impressive growth prospects coming out of China, a market that’s been hit with hard times of late. As the tides turn in due time, JWEL could become the must-have mid-cap once again.
Metro
Metro (TSX: MRU) is a Quebec-based grocer that recently reported some okay-ish quarterly results, with sales close to $5 billion, even as profit expectations keep in a tad on the soft side. At just 16.0 times trailing price to earnings, though, MRU seems like one of the staple stocks that looks too cheap to pass up if you’re looking to ready your portfolio for some sort of correction.
With a $15.89 billion market cap and a nice 1.91% dividend yield, MRU stock seems like one of those low-beta (currently at 0.04) ways to help your portfolio deal with any surges in market turbulence. Remember, low betas mean less correlation to the markets, not a lack of volatility in the stock itself.
