Oatly Group, SunOpta Inc., and Darling Ingredients are the 3 Best Consumer Staples stocks to buy in May 2024, according to Wall Street analysts. We leveraged the TipRanks Stocks Screener tool to discover these three companies with a “Strong Buy” consensus rating and more than 20% upside potential in the next twelve months.
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Consumer staples or consumer defensive stocks are generally associated with companies that manufacture essential goods bought by people for their everyday living. They are less sensitive to economic cycles and macro factors than consumer discretionary stocks. These companies often have a well-established business line with continuing demand for their goods. Let’s delve into the top three consumer staples stocks favored by analysts.
#1 Oatly Group AB (NASDAQ:OTLY)
Sweden-based Oatly claims to be the world’s first and largest oat milk company, acting as an alternative to dairy milk and milk products.
Oatly recently reported mixed results for Q1 FY23. Revenues rose 1.8% year-over-year to $199.16 million, beating the consensus of $197.63 million. Similarly, diluted loss per share improved to $0.08 per share from $0.13 in the prior-year quarter and was in line with estimates.
Oatly maintained its full-year Fiscal 2024 revenue growth (constant currency) forecast in the range of 5% to 10% and adjusted EBITDA (earnings before interest tax depreciation and amortization) loss guidance between $35 and $60 million.
Is Oatly a Good Stock to Buy?
With four Buys and one Hold rating, OTLY stock has a Strong Buy consensus rating on TipRanks. The average Oatly Group AB price target of $2.26 implies 82.3% upside potential from current levels. Meanwhile, OTLY shares have lost nearly 33% in the past year.
#2 SunOpta, Inc. (NASDAQ:STKL)
Canada-based SunOpta specializes in the sourcing, processing, and production of organic, natural, and non-GMO (genetically modified organisms) plant- and fruit-based food and beverage products. The company’s products are sold through retail, club, foodservice, and e-commerce channels.
SunOpta reported first-quarter adjusted earnings from continuing operations of $0.02 per share, lagging the consensus estimate of $0.03 per share. However, revenue jumped 18% year-over-year to $182.8 million, higher than the consensus of $168.9 million.
Based on the continued demand momentum, operational efficiencies, and solid pipeline of opportunities, SunOpta raised the full-year Fiscal 2024 guidance. SunOpta now projects revenue in the range of $685 to $715 million and adjusted EBITDA growth between 12% and 17% compared to FY23.
Is STKL a Buy?
On TipRanks, STKL stock commands a Strong Buy consensus rating, backed by six unanimous Buy ratings. The average SunOpta price target of $10 implies 80.5% upside potential from current levels. In the past year, STKL shares have lost 25.2%.
#3 Darling Ingredients (NYSE:DAR)
U.S.-based Darling Ingredients collects materials from the animal agriculture and food industries and processes them into high-quality fats and proteins, which are then used to feed animals and crops and fuel the world with renewable energy.
In Q1 FY24, DAR’s net sales fell 20.7% year-over-year to $1.42 billion and marginally missed analysts’ consensus estimate of $1.48 billion. Meanwhile, diluted earnings per share more than halved to $0.50 and laggged consensus forecast of $0.51. The company cited a notable decline in fat prices and weaker earnings within its renewable fuel joint venture, Diamond Green Diesel (DGD), as the reasons for its lower earnings.
Darling Ingredients is currently making adjustments to the purchase process and reducing operating costs to improve its margins. Looking ahead, management is optimistic about a rebound in its core specialty ingredient business, while the DGD unit’s performance is expected to improve. Overall, the company projects positive performance in FY24.
Is DAR Stock a Buy?
With ten Buys and two Hold ratings, DAR stock has a Strong Buy consensus rating on TipRanks. The average Darling Ingredients price target of $62.58 implies 45.5% upside potential from current levels. DAR shares have lost 33.5% in the past year.
Ending Thoughts
Companies in the consumer staples sector may not boast very high growth rates or earnings potential. Nonetheless, they usually have stable year-over-year revenue growth, earn steady profits, and usually pay dividends. Moreover, consumer staples stocks are generally less volatile. Investors looking to diversify their portfolios with consumer staples stocks can consider the above three companies after thorough research.
