Hi, I'm Susan Dziubinski with Morningstar.
It's been a tough year for stock investors, with nearly all stock sectors experiencing double-digit losses.
However, the consumer defensive sector has performed better than most this year. Why? As their name suggests, consumer defensive stocks tend to withstand economic uncertainty better than less-defensive sectors. That's because there's a reasonably constant demand for their products, no matter economic conditions.
Perhaps not surprisingly, the consumer defensive sector isn't nearly as undervalued as other sectors appear to be. But today, we're spotlighting two consumer defensive companies that still look cheap according to our metrics.
2 Cheap Defensive Stocks
These 5-star stocks are considered significantly undervalued. Data as of Oct. 20, 2022.
- Boston Beer SAM
- The Hain Celestial Group HAIN
The first is Boston Beer. Boston Beer is a leader in U.S. high-end malt beverages, with strong positions in craft beer, hard cider, and hard seltzer thanks to recognizable brands such as Samuel Adams, Angry Orchard, Twisted Tea, and Truly Hard Seltzer. Though Boston Beer is much smaller than other brewers, we think the company boasts a meaningful growth profile that the bigger brewers lack. The company is in tune with consumer trends and has shown innovative prowess. And we also think it operates with a cost advantage. We think Boston Beer stock is worth $680 per share.
Next is Hain Celestial Group. The company makes natural and organic food and personal-care products. Its brands include Celestial Seasonings, Terra, and Earth's Best baby food. The company has faced some challenges in 2022, including losing a large European private-label contract in January. That being said, the company continues to experience market share and distribution gains in most of its portfolio. We also view Hain as a compelling acquisition target. We think Hain Celestial stock is worth $37.50 per share.
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Susan Dziubinski shares other stock picks in "2 Dividend Stocks Top Managers Like."