The retail sector has been struggling amid inflationary pressure. Consumers cut down on discretionary goods and mainly spent on necessities such as grocery items throughout 2023. The grocery segment, which is part of the consumer staples sector, has thus not been affected much.

In fact, groceries have been driving the overall retail sales to a great extent during these trying times. Also, the majority of Americans are buying groceries online, a trend that picked up during the pandemic.

Online grocery sales totaled $8.5 billion in January, increasing 1.8% year over year, according to the Brick Meets Click/Mercatus Grocery Shopper Survey.

Online grocery sales totaled $95.8% in 2023, a 2% decline from the previous year. Although, sales declined last year, the figures are quite impressive compared to other segments, which took a major hit owing to the rising costs.

The ship-to-home segment saw year-over-year sales growing to $1.5 billion in January 2024, up 7.8% from the previous year. The segment got a boost in sales volume due to a solid jump in monthly active users (MAUs) and a more than 7% increase in average order value (AOV).

The pandemic prompted a surge in online shopping as millions sought to avoid the risk of contracting the virus. This trend has continued, with Americans now realizing the convenience of shopping online.

Also, sellers are redirecting their attention to strengthening their online platforms.

The grocery segment, being essential, is deemed defensive in times of price fluctuations and market instability. Given that markets have turned volatile once again after data showed that inflation soared in January, dimming hopes of a rate cut anytime soon, investing in defensive stocks like grocery companies that boast a robust online presence appears to be a prudent choice.

Our Choices

We have narrowed down our search to five consumer staple stocks such as Post Holdings, Inc. POST, Lancaster Colony Corporation LANC, Lamb Weston Holdings, Inc.LW, Tyson Foods, Inc. TSN and The Simply Good Foods Company SMPL. The stocks have a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Post Holdings is a consumer-packaged goods holding company involved in the production of center-of-the-store, refrigerated, foodservice, food ingredient and convenient nutrition product categories. POST also engages in the private brand food category.

Post Holdings has an expected earnings growth rate of 3.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 13.8% over the past 60 days. POST presently sports a Zacks Rank #1.