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The Wall Street rally that saw major indexes hit all-time highs in early February has suddenly come to a halt, with markets turning volatile again last week. Hotter-than-expected inflation data has dimmed hopes of a rate cut by the Federal Reserve anytime soon.

Investor confidence took a further hit after the release of the minutes of the Federal Reserve’s January FOMC meeting on Feb. 20. The minutes of the meeting suggest that the Federal Reserve is in no hurry to cut interest rates, and it will go for the first interest rate cut only after officials have “greater confidence” that inflation is cooling.

Fading hopes of a rate cut anytime soon saw the 10-year Treasury yield jump past 4%. Markets are pricing in just an 8.5% chance of the Federal Reserve going for a rate cut in March, according to the CME FedWatch tool. The probability was above 90% in the first week of January.

Also, expectations of a rate cut in May have declined substantially, with 76% of the market participants expecting the first rate cut not to happen before the June FOMC meeting.

Given this situation, investing in defensive stocks like consumer staples could be a safe bet.

The consumer staples sector is stable and robust at its core, as the demand for its services tends to remain unaffected by economic fluctuations. This sector comprises businesses offering essential products for everyday use, rendering it inherently defensive in its nature. Also, the sector is known for the predictability and consistency of its earnings and cash flows.

Our Choices

We have narrowed down our search to five consumer staple stocks such as Colgate-Palmolive Company (CL - Free Report), Church & Dwight Co., Inc. (CHD - Free Report), Inter Parfums, Inc. (IPAR - Free Report), Lamb Weston Holdings, Inc. (LW - Free Report), and Molson Coors Beverage Company (TAP - Free Report). Most of these stocks boast ratings of either a Zacks Rank #1 (Strong Buy) or #2 (Buy).

Colgate-Palmolive Company (CL)

This company's business strategy closely defines efforts to increase its leadership in key product categories through innovation in core businesses, tracking adjacent categories’ growth, and expansion into new markets and channels. Due to the shift of consumer preference to organic and natural ingredients, Colgate-Palmolive Company is expanding its Naturals range, including Naturals toothpaste.

Colgate-Palmolive Company has an expected earnings growth rate of 7.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the past 60 days. The stock presently has a Zacks Rank #2 (Buy) rating.

Church & Dwight Co., Inc. (CHD)

This next company develops, manufactures, and markets a broad range of household, personal care, and specialty products. The company is the leading U.S. producer of sodium bicarbonate, popularly known as baking soda, a natural product that cleans, deodorizes, leavens, and buffers.

Church & Dwight has an expected earnings growth rate of 8.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the past 60 days. The stock currently carries a Zacks Rank #3 (Hold) rating.

Inter Parfums, Inc. (IPAR)

This following company is engaged in the manufacturing, distribution, and marketing of a wide range of fragrances and related products. The company manages its business through two operational units — European-based operations and United States-based operations.

Inter Parfums has an expected earnings growth rate of 20.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the past 60 days. This stock currently has a Zacks Rank #2 (Buy) rating.

Lamb Weston Holdings, Inc. (LW)

This company is a leading global manufacturer, marketer, and distributor of value-added frozen potato products, particularly French fries, and it provides a range of appetizers. The company, along with its joint venture allies, is the top frozen potato products supplier in North America, while it also operates internationally, with a robust and growing presence in emerging markets.

Lamb Weston’s expected earnings growth rate for the current year is 26.9%. The Zacks Consensus Estimate for current-year earnings has improved 1.7% over the past 60 days. The stock currently has a Zacks Rank #2 (Buy).

Molson Coors Beverage Company (TAP)

This final company is the global manufacturer and seller of beer and other beverage products, and it has an impressive diverse portfolio of owned and partner brands. The company's brands include global priority brands such as Blue Moon, Miller Lite, CoorsBanquet, Coors Light, Miller Genuine Draft, and Staropramen, as well as regional champion brands like Carling and Molson Canadian.

Molson Coors Beverage Company’s expected earnings growth rate for the current year is 4.2%. The Zacks Consensus Estimate for the current-year earnings has improved 4.6% over the past 60 days. The stock presently sports a Zacks Rank #1 (Strong Buy) rating.

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