3 Outperforming Consumer Defensive Stocks

These companies have beaten the S&P 500 year to date

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Oct 07, 2022
  • Companies in the consumer defensive space typically do well regardless of the market environment since their products are considered necessities.
  • Stocks that qualified for the screener included Archer-Daniels Midland, Kroger and Bunge.
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Market indexes fell on Friday morning on the back of the jobs report for September showing the unemployment rate continues to decline despite the Federal Reserve’s attempts to curb inflation.

The Labor Department reported the unemployment rate of 3.5% fell short of the forecast of 3.7%. Additionally, nonfarm payrolls increased 263,000 for the month, which was below the Dow Jones estimate of 275,000.

Following the report, the Dow Jones Industrial Average sank 1.4%, the S&P 500 lost 1.8% and the Nasdaq Composite declined 0.09%.


Based on these developments, investors may be searching for value opportunities among stocks that have performed well so far this year.

While the consumer defensive sector has posted a negative return for the year so far at around -22.52%, it has still slightly outperformed the S&P 500’s return of -22.92% despite the uncertainty surrounding inflation and interest rates. Companies in this sector also typically perform well as their products are considered necessities.


The GuruFocus All-in-One Screener, a Premium feature, found several stocks that had at least a 10% higher return relative to the benchmark index for the period. It also looked for companies with a predictability rank of at least one out of five stars.

Consumer defensive stocks that met these criteria as of Oct. 7 included Archer-Daniels Midland Co. (

ADM, Financial), The Kroger Co. (KR, Financial) and Bunge Ltd. (BG, Financial).


Archer-Daniels Midland

Outperforming the benchmark index by approximately 49.07% year to date, Archer-Daniels Midland (

ADM, Financial) has a $47.98 billion market cap; its shares were trading around $85.59 on Fridaywith a price-earnings ratio of 13.47, a price-book ratio of 1.98 and a price-sales ratio of 0.51.

Commonly known as ADM, the Minneapolis-based consumer packaged goods company processes oilseeds, corn, wheat and other agricultural commodities.

The GF Value Line suggests the stock is modestly overvalued currently based on historical ratios, past financial performance and analysts’ future earnings projections.


The GF Score of 74 out of 100 indicates the company is likely to have average performance going forward. It received high points for profitability and growth, middling marks for financial strength and low grades for GF Value and momentum.


GuruFocus rated ADM’s financial strength 6 out of 10. Although the company has issued new long-term debt in recent years, it is manageable due to adequate interest coverage. The high Altman Z-Score of 3.32 also indicates it is in good standing even though assets are building up at a faster rate than revenue is growing. The return on invested capital slightly exceeds the weighted average cost of capital, meaning value is being created as the company grows.

The company’s profitability scored a 7 out of 10 rating on the back of an expanding operating margin and returns on equity, assets and capital that outperform over half of its competitors. ADM is also supported by a moderate Piotroski F-Score of 6 out of 9, meaning conditions are typical of a stable company, and a one-star predictability rank. According to GuruFocus research, companies with this rank return an average of 1.1% annually over a 10-year period.

Of the gurus invested in ADM,

Tom Gayner (Trades, Portfolio) has the largest stake with 0.26% of its outstanding shares. Murray Stahl (Trades, Portfolio), Diamond Hill Capital (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Ray Dalio (Trades, Portfolio)’s Bridgewater, Baillie Gifford (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Joel Greenblatt (Trades, Portfolio) and Steven Cohen (Trades, Portfolio), among several other gurus, also have positions in the stock.


Topping the S&P 500 by roughly 19.27% so far this year, Kroger (

KR, Financial) has a market cap of $31.13 billion; its shares were trading around $43.49 on Friday with a price-earnings ratio of 13.22, a price-book ratio of 3.22 and a price-sales ratio of 0.22.

The grocer, which is headquartered in Cincinnati, operates several chains of supermarkets throughout the U.S.

According to the GF Value Line, the stock is fairly valued currently.


The GF Score of 88 indicates the company has good performance potential, having raked in high grades for profitability, growth and momentum, middling marks for financial strength and a low grade for GF Value.


Assurant’s financial strength was rated 6 out of 10 by GuruFocus, driven by sufficient interest coverage and a high Altman Z-Score of 4.29. The ROIC also overshadows the WACC, so value creation is occurring.

The company’s profitability fared better with an 8 out of 10 rating. Although the operating margin is in decline, its returns are outperforming versus industry peers overall. Due to consistent earnings and revenue growth, Kroger also has a 4.5-star predictability rank. GuruFocus found companies with this rank return, on average, 10.6% annually.

With a 7.33% stake,

Warren Buffett (Trades, Portfolio) is Kroger’s largest guru shareholder. Other notable guru investors include Simons’ firm, Dalio’s firm, Jeremy Grantham (Trades, Portfolio), Jeff Auxier (Trades, Portfolio), Greenblatt and Paul Tudor Jones (Trades, Portfolio).


Having beaten the index by about 15.69% year to date, Bunge (

BG, Financial) has a $13.05 billion market cap; its shares were trading around $85.94 on Friday with a price-earnings ratio of 7.40, a price-book ratio of 1.48 and a price-sales ratio of 0.20.

The Chesterfield, Missouri-based agribusiness and food company exports soybeans internationally and is involved in food processing, grain trading and fertilizer production.

Based on the GF Value Line, the stock appears to be fairly valued currently.


The GF Score of 73 indicates the company is likely to have average performance going forward. It recorded middling marks across the board.


Bunge’s financial strength and profitability were both rated 6 out of 10 by GuruFocus. Despite the company issuing new long-term debt in recent years, the interest coverage made it manageable. The Altman Z-Score of 3.87 also indicated the company was in good standing even though assets are building up at a faster rate than revenue is growing. Value is also being created since the ROIC eclipses the WACC.

The company is also being supported by margins that are outperforming a majority of competitors. The Piotroski F-Score is low at 2, however, meaning operations are in poor shape. Having recorded losses in operating income, Bunge’s one-star predictability rank is on watch.

Simons’ firm has the largest position in Bunge with 0.49% of its outstanding shares.

Murray Stahl (Trades, Portfolio), Michael Price (Trades, Portfolio), Gabelli, Cohen, Greenblatt, Dalio’s firm and Jones also own the stock.

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I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
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