Yahoo Finance 4 Safe Stocks to Buy as Consumer Sentiment Hits 7-Month Low
The optimism surrounding the U.S. economy is fast fading as inflationary pressures continue to dent consumers’ confidence. The University of Michigan’s final consumer sentiment index showed that consumer sentiment declined 0.9% to 68.2 in June from May’s reading.
June’s reading was also the lowest in seven months. Other key components of the index also fell sharply. The gauge for current economic conditions dropped to 65.7.
Also, the survey’s outlook for the next six months fell to 56.9. Both indexes hit their lowest levels in six months. The survey’s one-year outlook for inflation rose to 4.4%.
Inflation declined sharply in 2023 before resuming its climb in the first quarter. This compelled the Federal Reserve to delay its rate-cut plans and reconsider hiking interest rates.
However, the Fed has refrained from hiking interest rates and kept its benchmark policy rate unchanged in the current range of 5.25-5.5% in its June FOMC meeting after inflation finally started showing signs of cooling in April and May.
The consumer price index (CPI) remained unchanged sequentially in May after rising 0.3% in April. Year over year, CPI rose 3.3% in May, slightly below the consensus estimate of an increase of 3.4%.
Core CPI, which excludes the volatile food and energy prices, climbed 0.2% sequentially in May and 3.4% from the year-ago levels, which were both below the consensus estimate of a rise of 0.3% and 3.5%, respectively.
However, core CPI remains sharply higher than the Fed’s 2% target. Also, Federal Reserve Chairman Jerome Powell said in his June post-FOMC meeting statement that the central bank sees only one 25 basis point rate cut this year, sharply lower than the three rate cuts projected in its March meeting.
Higher interest rates do not bode well for the broader economy and could keep markets volatile for a more extended period.
Our Choices
Given this situation, it would be wise to invest in defensive stocks. We have chosen four stocks from the utilities and consumer staples sectors with a low beta (beta greater than 0 but less than 1), a high dividend yield and a favorable Zacks Rank.
These are California Water Service Group CWT, Atmos Energy Corporation ATO, Portland General Electric Company POR, Colgate-Palmolive Company CL and Utz Brands, Inc. UTZ. Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
California Water Service Group is one of the largest investor-owned water utilities in the United States. CWT has six subsidiaries — California Water Service, Washington Water Service Company, New Mexico Water Service Company, Hawaii Water Service Company, CWS Utility Services and HWS Utility Services.
California Water Service Group has an expected earnings growth rate of 246.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 10.1% over the last 60 days. California Water Service Group has a beta of 0.48 and a current dividend yield of 2.34%. Currently, CWT carries a Zacks Rank #1.
Atmos Energy Corporation, along with its subsidiaries, is engaged in the regulated natural gas distribution and storage business. ATO serves nearly 3.4 million customers in more than 1,400 communities in eight states, from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energyoperates more than 72,000 miles of transmission and distribution lines as well as 5,700 miles of interstate pipelines.
Atmos Energy has an expected earnings growth rate of 10.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.8% over the last 60 days. ATO presently has a Zacks Rank #2. Atmos Energy has a beta of 0.67 and a current dividend yield of 2.80%.
Portland General Electric Company is a vertically integrated electric utility that serves residential, commercial and industrial customers in Oregon. POR has more than a century of experience in power delivery. Portland General Electric Company generates power from a diverse mix of resources, including hydropower, coal and natural gas.
Portland General Electric Company has an expected earnings growth rate of 29.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days. POR presently carries a Zacks Rank #2. Portland General Electric Company has a beta of 0.58 and a current dividend yield of 4.71%.
Colgate-Palmolive Company’s business strategy closely defines efforts to increase its leadership in key product categories through innovation in core businesses, tracking adjacent categories’ growth and expansion into new markets and channels. Due to the shift of consumer preference to organic and natural ingredients, CL is expanding its Naturals range, including Naturals toothpaste.
Colgate-Palmolive Company has an expected earnings growth rate of 9.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 60 days. CL presently has a Zacks Rank #2. Colgate-Palmolive has a beta of 0.39 and a current dividend yield of 2.09%.
Utz Brands, Inc. manufactures a diverse portfolio of salty snacks under popular brands, including Utz, TORTIYAHS!, Zapp's, Golden Flake, Good Health, Boulder Canyon and Hawaiian Brand. UTZ, formerly known as Collier Creek, is based in New York.
Utz Brands has an expected earnings growth rate of 26.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the last 60 days. UTZ currently carries a Zacks Rank #2. Utz Brands has a beta of 0.99 and a current dividend yield of 1.44%.
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Colgate-Palmolive Company (CL) : Free Stock Analysis Report
Portland General Electric Company (POR) : Free Stock Analysis Report
Atmos Energy Corporation (ATO) : Free Stock Analysis Report
California Water Service Group (CWT) : Free Stock Analysis Report
Utz Brands, Inc. (UTZ) : Free Stock Analysis Report
