What are consumer staples and why are they considered defensive investments?

Consumer staples are essential products people need regardless of economic conditions – things like food, household goods, personal care items, and basic clothing. They're considered defensive investments because demand remains relatively stable even during economic downturns. While luxury or discretionary spending might decrease when times are tough, people still need to purchase these everyday essentials, which can make these stocks less volatile during market turbulence.

What is a "high-volume, low-margin" business model?

A high-volume, low-margin business model means companies make a small profit on each individual sale but compensate by selling enormous quantities of products. Think of Walmart or Costco – they may only make pennies on each dollar of sales, but they sell billions of dollars worth of merchandise. This approach allows them to offer competitive prices while still generating substantial overall profits through sheer scale and efficient operations.

What are off-price retailers?

Off-price retailers like TJ Maxx, Ross, and Burlington buy excess inventory, canceled orders, and closeout merchandise from brand-name manufacturers and department stores, then sell these items at significant discounts (typically 20-60% below regular retail prices). They offer a "treasure hunt" shopping experience where inventory constantly changes. These stores thrive during economic uncertainty when consumers become more price-conscious while still wanting quality merchandise.

How does inflation affect value retailers?

Inflation can actually benefit value retailers in two key ways. First, as prices rise across the economy, more shoppers "trade down" from higher-priced stores to value-focused alternatives to stretch their budgets. Second, these companies' efficient operations and massive purchasing power often allow them to negotiate better with suppliers and absorb some cost increases without fully passing them on to customers. This can enhance their competitive position and potentially increase market share during inflationary periods.

What is a dividend yield?

Dividend yield is the annual dividend payment divided by the current stock price, expressed as a percentage. For example, if a stock trades at $100 and pays $3 in annual dividends, its dividend yield is 3%. It shows how much income you're receiving relative to your investment. Many established retailers in this collection pay dividends, providing investors with regular income in addition to any potential stock price appreciation.

15 handpicked stocks

Everyday Essentials

These companies power our daily lives by offering must-have products at wallet-friendly prices. Carefully selected by our analysts, this collection features retail giants with business models built to thrive even when consumers are watching every penny.

Han Tan | Market Analyst

Published on June 17

Top Picks from This Group

Here are a few of the assets in this group. Create an account to unlock the full list.

Walmart Inc.

WMT

Current price

$101.65

As the world's largest retailer, it offers a vast selection of low-priced consumer goods, from groceries to general merchandise.

Costco Wholesale

COST

Current price

$916.34

Operates a global chain of membership warehouses that provide a wide range of merchandise in bulk at low prices.

Dollar General Corporation

Current price

$101.40

Manages a vast network of small-box discount retail stores focused on low-cost consumables and household basics.

Dollar Tree, Inc.

DLTR

Current price

$90.24

TJX Companies, Inc., The

TJX

Current price

$142.49

Ross Stores Inc.

ROST

Current price

$156.17

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12 Month Growth Potential

Use the growth calculator to see how much investing in these assets could return over one year, based on aggregated analyst sentiment provided by Refinitive Ltd.

If you invested across these assets:

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In 12 months it might be worth:

$1,000.00

+4.54%

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About This Group of Stocks

Our Expert Thinking

These companies excel at selling essential, low-cost goods that people need regardless of economic conditions. Their high-volume, low-margin approach creates a defensive investment opportunity, potentially offering stability when consumers cut back on non-essential spending.

What You Need to Know

This collection spans discount retailers, warehouse clubs, dollar stores, and off-price merchandisers that serve millions of price-conscious shoppers. These businesses often demonstrate resilience during inflationary periods when consumers increasingly seek value on everyday purchases.

Why These Stocks

We've selected dominant players in the value retail space with massive customer bases, efficient operations, and proven supply chains. These established companies have demonstrated their ability to deliver everyday essentials at competitive prices while maintaining healthy business fundamentals.

Group Performance Snapshot

4.54%

Average 12 Month Profit

On average, analysts expect assets in this group to grow 4.54% over the next year.

13 of 15

Stocks Rated Buy by Analysts

13 of 15 assets in this group are rated Buy by professional analysts.

Source: Analyst sentiment is provided by Refinitiv Ltd, a global leader in financial market data with over 40k business clients. Refinitiv Ltd is an independent third party to Nemo. This is not advice.

Why You'll Want to Watch These Stocks

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Inflation-Resistant Winners

As prices rise, consumers are flocking to value retailers. These companies often see increased foot traffic when households look to stretch their budgets on essential purchases.

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Steady Through Storms

While luxury brands might struggle during economic downturns, these essential retailers tend to maintain steady performance. People always need groceries, household basics, and affordable clothing.

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Hidden Dividend Potential

Many established value retailers in this collection offer dividends, creating an opportunity for both growth and income in your portfolio. Their reliable business models support consistent payouts.

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