1 consumer stock with solid fundamentals and 2 we brush off

Consumer staples are considered safe havens in turbulent markets due to their inelastic demand profiles. But they’re also double-edged swords as they often lag in booming conditions, and this pattern has persisted recently. Over the past six months, the industry has recorded a loss of 1%, disappointing since the S&P 500 climbed 6.8%.

Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Taking that into account, here is one resilient consumer stock we’ve added to our cart and two best left ignored.

Two consumer staples stocks to sell:

Boston Beer (SAM)

Market Cap: $2.02 billion

Known for its flavorful beverages challenging the status quo, Boston Beer (NYSE:SAM) is a pioneer in craft brewing and a symbol of American innovation in the alcoholic beverage industry.

Why Do We Avoid SAM?

1. Annual sales declines of 2.6% for the past three years show its products struggled to connect with the market

2. Operating margin declined by 11.2 percentage points over the last year as its sales cratered

3. Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its falling returns suggest its earlier profit pools are drying up

Boston Beer’s stock price of $196.50 implies a valuation ratio of 18.8x forward P/E. To fully understand why you should be careful with SAM, check out our full research report (it’s free).

Zevia (ZVIA)

Market Cap: $92.33 million

With a primary focus on soda but also a presence in energy drinks and teas, Zevia (NYSE:ZVIA) is a better-for-you beverage company.

Why Does ZVIA Give Us Pause?

1. Flat sales over the last three years suggest it must innovate and find new ways to grow

2. Subscale operations are evident in its revenue base of $169.8 million, meaning it has fewer distribution channels than its larger rivals

3. Suboptimal cost structure is highlighted by its history of operating margin losses

Zevia is trading at $1.29 per share, or 0.5x forward price-to-sales. If you’re considering ZVIA for your portfolio, see our FREE research report to learn more.

One consumer staples stock to watch:

Celsius (CELH)

Market Cap: $7.20 billion

With its proprietary MetaPlus formula as the basis for key products, Celsius (NASDAQ:CELH) offers energy drinks that feature natural ingredients to help in fitness and weight management.

Why Does CELH Stand Out?

1. Impressive 47.4% annual revenue growth over the last three years indicates it’s winning market share

2. Earnings per share grew by 91.4% annually over the last three years and trumped its peers

3. CELH is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its recently improved profitability means it has even more resources to invest or distribute