Heineken and 11 other undervalued consumer stocks according to Morningstar

Morningstar picked the best defensive stocks in the consumer staples sector. These stocks can be likened to an umbrella: they are especially important when the economy is cloudy, the research agency said. The stocks of all the selected companies produce goods that people continue to buy during both economic growth and downturns.

Morningstar considered three criteria to compile the list. The first is that the list includes undervalued securities in terms of price/fair value. Second, the stock must have a low, medium, high or very high Morningstar Uncertainty Rating, which shows how much fair value can fluctuate. And the third criterion is the so-called Morningstar Economic Moat Rating, which shows how long companies can remain competitive (the wider the better).

Who made the list?

The most undervalued stock was the manufacturer of canned soups and food products Campbell's. The fair value of the company's securities, according to Morningstar estimates, is $62, suggesting a potential upside of another 87% from its closing level on Friday, August 22. Morningstar analysts praised the company's growth strategy: in recent years it has reduced the share of soups in sales to 25% and increased the share of snacks to 50%, achieved annual organic revenue growth of 3% and stable margins through investments in technology, analytics and artificial intelligence.

Kraft Heinz, one of the largest food and sauce makers in North America, is in second place, with Morningstar estimating that the company's securities could rise another 82% (to $51 apiece). The company has shifted from a profit focus to a sustainable growth strategy: it has saved $1.5 billion since 2023 and plans to increase that figure to $2.5 billion by 2027, while investing in marketing, innovation, and e-commerce development. In addition, Kraft Heinz continues to raise prices flexibly to mitigate inflationary pressures on key categories like coffee, eggs and meat.

Next on the list is the owner of the Corona beer brand and maker of other spirits Constellation Brands. The company's stock price has 47% upside potential from Friday's close (to $247 per paper), Morningstar notes. Despite slowing growth in 2025 due to economic pressures, Constellation Brands' long-term outlook remains solid: premium Marks and new products are supporting the business, and audience expansion beyond Hispanics is setting the stage for volume recovery, the analyst adds. However, he recognizes that while the company has more than 70% of the premium imported beer segment in the U.S., the key risks remain weak results in wine and spirits, as well as increased competition.

In fourth place is household chemicals and disinfectants maker Clorox, with the potential to grow its market value by another 47% (to $177 per share). The company has managed to survive a pandemic, supply chain disruptions, inflation and a 2023 cyberattack by continuing to invest in brands and digital technologies, the publication notes. Morningstar analysts expect Clorox to return to its more familiar gross margin of 44% by the end of 2025, despite duty pressures and rising costs.

Next on the list was Lamb Weston Holdings, North America's largest producer of convenience potatoes, with more than 40% of the market in the region. The company's shares have fallen nearly 15% since the beginning of the year, but Morningstar believes they have upside potential of another 40% (to $80 a piece). The publication's analyst says Lamb's strong position provides access to high-yielding regions and long-term contracts with farmers, and long-term growth in French fries consumption should support margin recovery.

In sixth place is Latin American brewing concern Ambev (+40% growth potential). The company controls over 60% of the beer market in Brazil and over 65-70% in other Latin American countries, which gives it a price advantage and high efficiency. Morningstar's analyst believes the company will be able to maintain its market share due to its cost advantage and broad portfolio, although the main risk remains price competition from large players entering the attractive Latin American market.

Seventh place goes to Samuel Adams beer and cider brand owner Angry Orchard Boston Beer with the potential for another 36% increase in market value. According to a Morningstar analyst, the company is benefiting from the trend toward premium products and is betting on innovation and marketing to hold its ground despite weakness in the low-alcohol carbonated beverage segment and competition.

Boston Beer is followed by cosmetics and perfume maker Estée Lauder. The company's stock is already up 20% since the beginning of the year, but Morningstar sees the stock with upside potential of another 36% to $120 per share. Estée is benefiting from the global trend toward premium cosmetics, especially in Europe and Asia, where La Mer and Estée Lauder brands are strong, and expanding its presence in new markets like India, Brazil and China. The publication's analysts also noted risks: weak sales in China, the need to revamp its decorative cosmetics portfolio and uncertainty surrounding the leadership change. However, in the long term, they said the company remains strong thanks to the strength of its brands and active investment in digital channels.

In ninth place is Jack Daniel's whiskey brand owner Brown-Forman, with the stock up 34% (to $42 a share). With over 150 years of experience, consistent quality and high recognition, Brown-Forman has a strong position in the market, Morningstar believes. The company is also expanding its portfolio with innovations and ready-to-drink cocktails, including the global launch of Jack & Coke with Coca-Cola, as well as acquiring super-premium brands in the gin and rum segments. Risks include regulation in developed countries, growing consumer health concerns and trade tensions, but in the long term, Brown-Forman maintains a strong position due to its premium image, the Morningstar analyst said.

Tenth place went to international brewer Heineken with a growth potential of 21%. The main growth driver for Heineken remains the shift of consumers to more expensive premium Marks: in developed countries this compensates for lower volumes, and in emerging markets - India, Indonesia, Africa and Latin America - the company is actively expanding its presence. High margins and product profitability also enable the company to steadily pass through crises and maintain a strong position in the long term.

In the penultimate place was General Mills, a food and breakfast cereals manufacturer with a growth potential of about 20%. The company holds leading positions in the breakfast cereals segment (Cheerios - 30% of the US market), successfully developing snacks, ready meals, baked goods and ice cream. The pet food segment remains an important growth driver, and investments in innovation and marketing help General Mills maintain its competitive advantage and strengthen its long-term position.

Rounding out the list is Coca-Cola distributor and OXXO store chain owner Fomento Economico Mexicano (Femsa), with growth potential of nearly 16%. Femsa is growing its business through organic growth and deals: Coke Femsa is strengthening its position in Latin America, while Oxxo is scaling its convenience store format in Mexico, Chile, Peru and Colombia, expanding also in Brazil. The company is also actively developing digital channels - its loyalty programs already have more than 26 million users.

This article was AI-translated and verified by a human editor