Five Stable Trending Consumer Staples Stocks

Feb 11, 2013: 3:47 PM CST

While consumer staples/defensive stocks may not be the most exciting names in the market, they can offer stable uptrends along with their stock dividends.

Day traders won’t gravitate toward these stocks due to the low relative volatility, but swing traders and some investors may use them in their growing portfolios as stable, consistent plays.

Let’s take a look at five “Stable Staples” stocks that have shown persistent uptrends through 2012 to present, though keep in mind these are not trading or investment recommendations just by looking at the charts – use these as springboards to conduct your own research and analysis.

Campbell Soup Company (CPB):

HJ Heinz Company (HNZ):

General Mills Incorporated (GIS):

Kellogg Company (K):

Whirlpool Corporation (WHR):

These S&P 500 components have shown a high degree of stable trend, albeit in the context of a similarly rising stock market during this time.

Whirlpool arguably would be the exception in the list above as it is an appliance company, but consumers must use kitchen/household appliances even during difficult economic times.

In general, consumer staple stocks tend to be less volatile than their consumer discretionary/retail companions, though staples stocks are expected to hold up better (lose less money) during periods of stock market and economic decline.

The Consumer Staples sector includes products that consumers must use during good times and bad; popular examples include toothpaste, food, hygiene, beverages, etc.

They tend to make good “hedging” candidates for hose who need to be fully invested even during market declines.

That’s not to say that these particular stocks can’t reverse and trend lower, especially if the broader market reverses lower in the near future, but traders tend to overlook stocks like these during the good times in the market and turn to them during bad periods in the market.

Apply the same trading rules, signals, and triggers you would with typical stocks, but beware that the volatility – and expected profit – is likely to be less than stocks with higher volatility and beta (movement relative to the broader market).

As such, your trading or investing horizon would need to be longer when trading these type of ‘stable’ trenders, though you could still attempt retracement (pullback) entries to moving averages during trend phases in price.

For a definition, a ‘stable trend’ would include a series of higher swing highs/swing lows along with a steady rise in the 20 and 50 day EMAs (which are separated from each other) and of course the 20 and 50 day EMAs would be well-above the rising 200 day SMA.

You could also draw trendlines (as I show with General Mills) for additional reference (entries and targets).

The stable trend would end when price breaks and sustains a close under the rising 50 day EMA or under the lower rising parallel trendline.

Don’t try to stay with a stock that may be breaking down – move on to another name that shows a similar stable-trend pattern that instead is not breaking down (don’t get ‘wedded’ to a particular stock).

Corey Rosenbloom, CMT
Afraid to Trade.com

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4 Comments

4 Responses to “Five Stable Trending Consumer Staples Stocks”

  1. Bernie Says:

    Thanks for bringing these short candidates to the forefront.

  2. Five Stable Trending Consumer Staples Stocks | Afraid to Trade.com … | Stocks Reporter Says:

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  3. Corey Rosenbloom, CMT Says:

    Yes, these would be reversal/breakdown candidates as well on a trigger/break but they likely won't fall as fast as higher beta names should the trends reverse.

  4. EvaBrain Says:

    Even though the sector has underperformed the S&P 500 over the last five years, it must be kept in mind that investing in consumer-staples companies also carries lower risks, and ofcourse the lower returns as well.

    -Source “BidnessEtc”