In this article, we will explore the top 12 FMCG stocks that investors should consider purchasing right now. For those who prefer a quick overview, feel free to jump directly to the 5 Best FMCG Stocks To Buy Now.
Fast-Moving Consumer Goods (FMCG), also referred to as consumer packaged goods (CPG), encompass a range of products that are in high demand and typically sold at affordable prices. These items are labeled as “fast-moving” because they quickly leave store shelves due to frequent consumer use. The FMCG sector is one of the largest industries globally, enjoying consistent growth over the past decade. This growth has been fueled by the rise of experience retailing, where shopping becomes a social event for consumers. According to a report by Allied Market Research, the global FMCG market is expected to hit a staggering $15,361.8 billion by 2025, with a compound annual growth rate (CAGR) of 5.4% from 2018 to 2025.
Even amidst inflation and challenging market conditions, essential purchases like food and household items ensure that FMCG stocks remain a more stable investment compared to other sectors. Noteworthy companies in this space include Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), PepsiCo, Inc. (NASDAQ:PEP), and Colgate-Palmolive Company (NYSE:CL). These stocks are highly coveted by hedge funds, as discussed in more detail below.
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Through a detailed analysis of grocery stocks traded on NYSE and NASDAQ, we have curated a list of 12 grocery stocks that could significantly enhance an investor’s portfolio. These stocks not only exhibit robust financial health but are also favored by 920 elite hedge funds tracked by Insider Monkey as of the end of the third quarter.
Top FMCG Stocks Worth Investing In Right Now
12. Dollar Tree, Inc. (NASDAQ:DLTR)
Number Of Hedge Fund Holders: 37
Dollar Tree, Inc. (NASDAQ:DLTR) stands out as a notable American multi-price-point chain offering discount variety goods. With its headquarters in Chesapeake, Virginia, the company operates 15,115 stores across the contiguous U.S. states and Canada. Its extensive logistics network, comprising 24 distribution centers, helps the brand effectively cater to a primarily “financially disadvantaged” customer base who seek affordable shopping options.
In early November, Deutsche Bank analyst Krisztina Katai raised the price target for Dollar Tree, Inc. (NASDAQ:DLTR) from $163 to an impressive $194 while maintaining a Buy rating on the shares. The analyst expressed optimism regarding the company’s sales performance in Q3, noting that both of its banners experienced sales growth, with same-store sales showing improvement as the quarter progressed. This positive trend has led to an increase in revenue guidance for 2022.
As highlighted in Insider Monkey’s third-quarter database, 37 hedge funds expressed bullish sentiments towards Dollar Tree, Inc. (NASDAQ:DLTR), a slight decline from 38 funds in the previous quarter. Paul Hilal’s Mantle Ridge LP holds the largest position in the company, with 11.3 million shares valued at approximately $1.5 billion.
Similar to Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), PepsiCo, Inc. (NASDAQ:PEP), and Colgate-Palmolive Company (NYSE:CL), Dollar Tree, Inc. (NASDAQ:DLTR) ranks among the top FMCG stocks recommended by elite investors.
Here’s an excerpt from Madison Funds regarding Dollar Tree, Inc. (NASDAQ:DLTR) in its Q2 2022 investor letter:
“Dollar Tree, Inc. (NASDAQ:DLTR) reported strong results following the implementation of the $1.25 price point initiative across all its stores nationwide. Additionally, several executive leadership changes were announced, spurred by the new Executive Chairman Richard Dreiling. We remain optimistic about the progress made thus far and look forward to the potential that the new team can unlock at Dollar Tree in the coming years.”
11. Monster Beverage Corporation (NASDAQ:MNST)
Number Of Hedge Fund Holders: 39
Monster Beverage Corporation (NASDAQ:MNST) is a prominent American beverage company that specializes in developing, marketing, selling, and distributing energy drinks and concentrates, including popular brands such as Monster Energy, Relentless, and Burn. On October 27, a marketing partnership was announced between Madison Square Garden Sports and Madison Square Garden Entertainment Corporation with Monster Energy Corporation (NASDAQ:MNST), designating it as the “Official Energy Drink Partner of the New York Rangers and Madison Square Garden.”
On November 29, Argus analyst John Staszak raised the price target for Monster Beverage Corporation (NASDAQ:MNST) from $113 to $118 while maintaining a Buy rating. The analyst noted that despite investor concerns regarding rising input costs, MNST shares remain attractive. He attributed the company’s lower earnings in Q3 to aluminum can shortages and increased transportation expenses, while simultaneously raising FY23 earnings guidance by 1 cent to $3.16.
At the close of Q3 2022, 39 hedge funds in Insider Monkey’s database held stakes in Monster Beverage Corporation (NASDAQ:MNST), representing a decrease from 46 funds in the prior quarter, with a total value of $1.96 billion.
In its Q2 2022 investor letter, Carillon Tower Advisers highlighted Monster Beverage Corporation (NASDAQ:MNST) as one of its top picks. Here’s what the fund had to say:
“Monster Beverage Corporation (NASDAQ:MNST) specializes in the development and sale of energy drinks and concentrates. The company’s shares have outperformed, largely driven by a strong earnings report that showcased better-than-expected organic growth. Management provided guidance indicating a potential bottoming out of gross margins, along with anticipated price increases, which bolstered investor confidence in its growth trajectory.”
10. Mondelez International, Inc. (NASDAQ:MDLZ)
Number Of Hedge Fund Holders: 52
Mondelez International, Inc. (NASDAQ:MDLZ) stands as an influential American multinational company specializing in confectionery, food, beverages, and snack items, headquartered in Chicago. As of December 9, it boasts a quarterly dividend of $0.39 per share, translating to a dividend yield of 2.3%. Notably, Mondelez has consistently increased its dividends over the past eight years, making it a top contender for dividend stocks within the FMCG sector.
On November 2, Morgan Stanley analyst Pamela Kaufman elevated her price target for Mondelez International, Inc. (NASDAQ:MDLZ) from $63 to $69, maintaining an Overweight rating after the company beat Q3 EPS expectations, demonstrating strong organic sales growth, and increasing FY22 guidance.
By the end of Q3 2022, 52 hedge funds tracked by Insider Monkey held stakes in Mondelez International, Inc. (NASDAQ:MDLZ), up from 48 in the previous quarter. The total value of these stakes exceeds $1.44 billion, with Two Sigma Advisors emerging as the leading stakeholder.
Coho Partners remarked on Mondelez International, Inc. (NASDAQ:MDLZ) in its Q3 2022 investor letter, stating:
“Analysts’ estimates for both 2022 and 2023 for the S&P 500 Index are beginning to show a downward trend. While Coho is not immune to the earnings pressures imposed by a strong U.S. dollar, its portfolio overall has slightly less foreign revenue exposure compared to the S&P 500 Index. Mondelez International (NASDAQ:MDLZ) is significantly impacted, deriving approximately 75% of its revenues from outside the U.S.”
9. Colgate-Palmolive Company (NYSE:CL)
Number Of Hedge Fund Holders: 57
Colgate-Palmolive Company (NYSE:CL) is a renowned American multinational consumer products firm based in New York City. The company specializes in delivering a wide array of household, health care, personal care, and veterinary products, making it a trusted name in many households.
In early November, Barclays analyst Lauren Lieberman increased the price target for Colgate-Palmolive Company (NYSE:CL) from $72 to $76 while maintaining an Equal Weight rating on the shares. The analyst noted that Colgate’s Q3 results did not align with expectations, diverging from trends observed across similar staples this earnings season.
By the end of Q3 2022, 57 hedge funds tracked by Insider Monkey had adopted a bullish approach toward Colgate-Palmolive Company (NYSE:CL), a rise from 55 funds in the previous quarter. The amassed value of stakes owned by these hedge funds exceeds $4 billion.
Third Point commented on Colgate-Palmolive Company (NYSE:CL) in its recent Q3 2022 investor letter, elaborating:
“Third Point has recently acquired a significant position in Colgate-Palmolive Company (NYSE:CL). This investment aligns with several strategic criteria in the current investment climate. First, the business is defensive and possesses notable pricing power amidst inflationary pressures. Second, there exists hidden value in the company’s Hill’s Pet Nutrition segment, which we believe would command a premium multiple if separated from Colgate’s consumer assets. Third, the prevailing industry conditions in consumer health present opportunities for new entrants, spin-offs, and potential consolidations. Lastly, the stock’s current valuation is appealing, as earnings growth is expected to accelerate, while shareholders benefit from minimal costs associated with the optionality surrounding Hill’s or Colgate’s involvement in further consolidations in the consumer health sector.
Colgate maintains a diverse portfolio of brands and operates in four major categories that typically thrive in a variety of economic climates: oral care, home care, personal care, and pet nutrition. Although Colgate has achieved organic sales growth of 5-6% over recent years, it has struggled with earnings growth, leading to its status as a perennial underperformer. Foreign exchange challenges have adversely impacted reported results. Factors such as business reinvestment, supply chain disruptions, and inflationary pressures have all weighed on profit margins; however, many of these issues are now showing signs of improvement. Increased investments in demand generation, product innovation, and digital capabilities are beginning to yield positive results. Global supply chain bottlenecks are easing, leading to improved product availability on store shelves. Most crucially, costs associated with raw materials, transportation, and labor are stabilizing or even decreasing in some instances, all while additional pricing strategies are being implemented. Collectively, these developments create a favorable environment for Colgate to deliver several years of strong earnings growth as sales continue to rise, foreign exchange fluctuations level out, and profit margins recover…” (Click here to view the full text)
8. Dollar General Corporation (NYSE:DG)
Number Of Hedge Fund Holders: 59
Dollar General Corporation (NYSE:DG) is a prominent American variety store chain based in Goodlettsville, Tennessee. As the largest retailer in the U.S. by store count, it operates over 18,000 locations across 47 states. On December 1, Dollar General announced a quarterly dividend of $0.55 per share, consistent with previous distributions. This dividend is set to be paid on January 17, 2023, to shareholders of record as of January 3.
In early November, Deutsche Bank analyst Krisztina Katai raised the price target for Dollar General Corporation (NYSE:DG) from $265 to $293 while keeping a Buy rating. The analyst advised investors to focus on the “winners” in the retail sector.
According to Insider Monkey’s third-quarter database, 59 hedge funds maintained long positions in Dollar General Corporation (NYSE:DG), compared to 51 funds in the previous quarter. Andreas Halvorsen’s Viking Global held the largest position in the company, comprising 2.4 million shares valued at $582 million.
Aristotle Capital specifically highlighted Dollar General Corporation (NYSE:DG) in its Q2 2022 investor letter, stating:
“Dollar General Corporation (NYSE:DG) positively contributed to our performance in the second quarter following the report of first-quarter earnings that exceeded expectations. The second quarter’s strength was driven by unexpectedly high sales of consumable items. Additionally, guidance for the remainder of the year was raised. Notably, forecasts for an anticipated recession heightened positive sentiment toward consumer discretionary companies with more predictable revenue streams, such as dollar stores.”
7. The Coca-Cola Company (NYSE:KO)
Number Of Hedge Fund Holders: 59
The Coca-Cola Company (NYSE:KO) is widely recognized as one of America’s premier beverage companies, specializing in a vast range of products, including syrups and non-alcoholic beverages. The company is best known for producing Coca-Cola, a classic soft drink that has been a staple in households worldwide.
As one of the best FMCG stocks that also offers dividends, The Coca-Cola Company (NYSE:KO) boasts an impressive 60-year history of consistent dividend growth. Currently, the company provides a per-share dividend of $0.44, resulting in a dividend yield of 2.79% as of December 9.
According to Insider Monkey’s third-quarter database, 59 hedge funds were optimistic about The Coca-Cola Company (NYSE:KO), a slight decrease from 60 funds in the previous quarter. Notably, Warren Buffett’s Berkshire Hathaway holds the largest stake in the company, with an astounding 400 million shares valued at $22.40 billion.
Carillon Tower Advisers commented on The Coca-Cola Company (NYSE:KO) in its Q3 2022 investor letter:
“Shares of The Coca-Cola Company (NYSE:KO) experienced a sell-off alongside consumer staples, despite the company reporting strong pricing in the second quarter. On average, product prices have risen, with management suggesting that further pricing momentum is on the horizon.”
6. Philip Morris International Inc. (NYSE:PM)
Number Of Hedge Fund Holders: 63
Philip Morris International Inc. (NYSE:PM) is a leading international tobacco company based in the United States, engaged in the production and distribution of cigarettes and other tobacco-related products. Often categorized as part of Big Tobacco, its most recognized brand is Marlboro, which enjoys widespread popularity.
On November 15, Argus analyst David Coleman upgraded Philip Morris International Inc. (NYSE:PM) from Hold to Buy, raising the price target to $110. He highlighted the company’s transition away from traditional cigarettes towards higher-margin alternatives like HTP, with aspirations to become smoke-free by 2025. The management’s decision to increase the dividend further demonstrates their confidence in the company’s promising outlook.
According to Insider Monkey’s database, 63 hedge funds held stakes in Philip Morris International Inc. (NYSE:PM) at the end of Q3 2022. GQG Partners emerged as the top stakeholder in the company during this period.
Similar to Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), PepsiCo, Inc. (NASDAQ:PEP), and Colgate-Palmolive Company (NYSE:CL), Philip Morris International Inc. (NYSE:PM) is recognized as one of the leading FMCG stocks.
Here’s a statement from Coho Relative Value Equity Fund regarding Philip Morris International Inc. (NYSE:PM) in its Q3 2022 investor letter:
“Coho has faced earnings pressure from the strong U.S. dollar, although the overall portfolio has slightly less foreign revenue exposure compared to the S&P 500 Index. Philip Morris is particularly impacted, deriving nearly all its revenues outside the U.S. The decline in earnings for Philip Morris in 2022 compared to 2021 is entirely attributable to the strengthening dollar. In constant currency terms, Philip Morris’ earnings in 2022 would have shown mid to high single-digit growth.
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Disclosure: 10 Best FMCG Stocks To Buy Now is originally published on Insider Monkey.
