3 Wide-Moat Consumer Staple Stocks to Buy Before the Next Recession Hits
Who would have thought that recession fears would return to haunt the U.S., especially under a right-wing, pro-business President Trump?
In a recent interview with Fox, Trump surprisingly didn't rule out the possibility of a recession due to major policy shifts with tariffs and DOGE. He emphasized that his priority is strengthening America rather than worrying about short-term stock market performance.
This marks a dramatic shift from his first term, where he consistently highlighted the stock market's success as a reflection of his policies.
What makes matters more concerning is the Atlanta Fed GDPNow estimate, which indicated a negative growth of 2.4% for Q1 2025 as of March 6, even before Trump's full policy suite takes effect.
Is this a warning sign for investors that a stock market crash could precede an actual recession? While it might be premature to definitively conclude, investors could consider defensive stocks in the consumer staples sector.
This sector is particularly attractive now because many consumer staple stocks have been battered in recent years as tech stocks soared due to AI hype. In the last month, however, consumer staples have outperformed most other sectors, hinting at an ongoing sector rotation.
Not every consumer staple stock is a bargain or a fundamentally strong company. To navigate this, we use Morningstar ratings to identify the best opportunities, based on these criteria:
Wide Economic Moat: Indicating strong competitive advantages.
At Least 4-Star Rating: Signifying undervaluation.
Low Uncertainty: Suggesting predictable future performance.
Applying these filters, three standout stocks emerged: