Walmart Has Seized the Baton From Nvidia. What?

Consumer staples are one of the sleepiest sectors of the US stock market. Investors buy them for their low volatility and generous dividends, not exhilarating upside potential. But lately, toothpaste, bleach and certain big-box food retailers seem to be acting like the new semiconductors.

The S&P 500 consumer staples sector has returned 19.8% year to date, pushing the blended forward price-earnings multiple to 21.5 at the time of writing, near the highest since 2022. Some of that reflects optimism around juggernauts including Costco Wholesale Corp. and Walmart Inc. — which command multiples of 51.2 times and 30.8 times forward earnings, respectively — but the frothiness extends to other parts of the diverse super-sector as well.

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Colgate-Palmolive Co., Procter & Gamble Co. and Coca-Cola Co. now trade at 27.9 times, 24.7 and 24 times blended forward earnings. Those multiples are 3, 1.3 and 0.8 standard deviations above their 2014-2023 averages — not 2021 meme-stock expensive, but certainly expensive on their own terms.

expensive staples