These Consumer Staples Stocks Marked Stellar Gains in Q1

The S&P 500 marked a strong comeback in the first quarter of 2019 after the sell-off at the end of 2018. The majority of sectors, including the consumer staples sector, reported healthy growth thanks to the stellar performances of HPC (household and personal care) product manufacturers, tobacco companies, and packaged food companies.

The Consumer Staples Select Sector SPDR ETF (XLP) rose 10.5% in the first quarter of 2019. In comparison, the SPDR S&P Retail ETF (XRT), the Consumer Discretionary Select Sector SPDR ETF (XLY), and the Technology Select Sector SPDR ETF (XLK) rose 9.8%, 15.0%, and 19.4%, respectively.

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The graph above shows that the stock prices of tobacco, HPC, and most packaged food manufacturing companies registered strong double-digit growth and beat the broader markets in the first quarter. Accelerated sales growth and cheap valuations drove the stocks of packaged food manufacturers higher.

Shares of General Mills (GIS), Conagra Brands (CAG), Tyson Foods (TSN), Mondelēz (MDLZ), the J.M. Smucker Company (SJM), and the Campbell Soup Company (CPB) registered rises of 32.9%, 29.9%, 30.0%, 24.7%, 24.6%, and 15.6%, respectively, in the period.

Meanwhile, improved organic sales, innovations, and low valuations supported the uptrend in HPC stocks. Estée Lauder (EL), Colgate-Palmolive (CL), and Procter & Gamble (PG) recorded rises of 27.2%, 15.2%, and 13.2%, respectively, in the first quarter. Coty (COTY) jumped ~75% in the quarter, outperforming its peers driven by better-than-expected second-quarter earnings, improved margins, and a proposed stake increase by JAB Holdings.

Tobacco stocks, which took a beating in 2018 due to worries about a decline in cigarette volumes amid regulatory hurdles, bounced back in the first quarter. Philip Morris (PM) and Altria (MO) rose 32.4% and 16.3%, respectively.