Americans are worried about the economy’s health as uncertainty over an end to the U.S.-Iran conflict and soaring inflation are dampening their sentiment. Consumer sentiment hit an all-time low in April as disruptions in shipping at the Strait of Hormuz saw prices of not only oil rise but also several other commodities surge over the past month.
Also, inflation rose in March to its highest level in nearly a year, dashing hopes of a rate cut by the Federal Reserve anytime soon. We, thus, recommend buying five defensive stocks from the utility and consumer staples sectors, namely, Atmos Energy Corporation ATO, Consolidated Edison, Inc. ED, Northwest Natural Holding Company NWN, B&G Foods, Inc. BGS and Smithfield Foods, Inc. SFD.
These stocks have seen positive earnings estimate revisions in the past 60 days, carry a Zacks Rank #1 (Strong Buy) or 2 (Buy), and are set for solid returns. You can see the complete list of today’s Zacks #1 Rank stocks here.
Consumer Sentiment Plunges to Record Low
The University of Michigan reported that its Consumer Sentiment Index dropped to a final reading of 49.8 in April, plunging to an all-time low. Although the final reading was a slight improvement from the preliminary reading of 47.6, the economic outlook looks grim.
The marginal improvement came after the United States announced a two-week ceasefire in the Iran war. However, the ceasefire has looked fragile, and negotiations have failed, raising concerns over a peace deal anytime soon.
Global oil prices have surged more than 30% since the beginning of the Middle East conflict. Disruptions in ships passing the Strait of Hormuz have also seen a surge in prices of other key commodities, including fertilizers, petrochemicals, semiconductors and aluminum.
Also, the consumer expectations for inflation over the next 12-month period climbed to 4.7% in April from 3.8% in the prior month. Consumers’ long-term expectations for inflation jumped to 3.5% this month from 3.2% reported in March.
Inflation has been a recurring issue for both consumers and the Federal Reserve. The consumer price index (CPI) surged 0.9% sequentially in March from February’s jump of 2.4%, the Commerce Department reported last week. This takes the annual inflation rate to 3.3% and, the highest level since May 2024.
High inflation has posed a major challenge for the Federal Reserve, compelling it to keep interest rates unchanged this year. Investors now fear that there could be no rate cuts this year.
5 Low-Beta Defensive Stocks With Growth Potential
Atmos Energy Corporation
Atmos Energy Corporation, along with its subsidiaries, is engaged in the regulated natural gas distribution and storage business. ATO serves nearly 3.3 million customers in more than 1,400 communities across eight states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energy operates more than 73,000 miles of transmission and distribution lines as well as 5,700 miles of interstate pipelines.
Atmos Energy has an expected earnings growth rate of 11% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1% over the last 60 days. ATO currently has a Zacks Rank of 2, a beta of 0.69 and a current dividend yield of 2.16%.
Consolidated Edison
Consolidated Edison, Inc. is a diversified utility holding company with subsidiaries engaged in both regulated and unregulated businesses. ED’s regulated businesses operate through its subsidiaries — Consolidated Edison Company of New York, Orange and Rockland Utilities, Con Edison Clean Energy Businesses, Inc., and Con Edison Transmission, Inc.
Consolidated Edison has an expected earnings growth rate of 6.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1% over the last 60 days. ED presently has a Zacks Rank #2. Consolidated Edison has a beta of 0.34 and a current dividend yield of 3.26%.
Northwest Natural Holding Company
Northwest Natural Holding Company builds and maintains natural gas distribution systems, as well as invests in natural gas pipeline projects through its subsidiaries. NWN serves residential, commercial and industrial customers primarily in the United States, Canada and the Service Territory.
Northwest Natural Holding Company has an expected earnings growth rate of 4.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1% over the last 60 days. Zacks Rank 2 NWN has a beta of 0.50 and a current dividend yield of 3.69%.
B&G Foods
B&G Foods, Inc. boasts of a diversified portfolio of more than 45 brands, including B&G, B&M, Cream of Wheat, Las Palmas, Mama Mary's, Maple Grove Farms, Mrs. Dash, New York Style, Ortega, Pirate's Booty, Polaner, SnackWell's, Spice Islands and Victoria. Many of these brands hold leading market shares in different regions. BGS frequently engages in acquisitions and innovations to further strengthen its portfolio.
B&G Foods has an expected earnings growth rate of 5.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8% over the last 60 days. Zacks Rank 2 B&G Food has a beta of 0.46 and a current dividend yield of 14.21%.
Smithfield Foods
Smithfield Foods, Inc. is a pork producer and food-processing company. SFD is based in Smithfield, VA.
Smithfield Foods has an expected earnings growth rate of 7.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 11.8% over the last 60 days. Currently, Smithfield Foods carries a Zacks Rank 1. It has a dividend yield of 4.26%.
Radical New Technology Could Hand Investors Huge Gains
Quantum Computing is the next technological revolution, and it could be even more advanced than AI.
While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.
Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power .
Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.
See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Consolidated Edison Inc (ED): Free Stock Analysis Report
B&G Foods, Inc. (BGS): Free Stock Analysis Report
Atmos Energy Corporation (ATO): Free Stock Analysis Report
Northwest Natural Gas Company (NWN): Free Stock Analysis Report
Smithfield Foods, Inc. (SFD): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).