Jefferies has advised investors to take long positions in a select group of large-cap consumer staples companies after gasoline prices climbed above the $3.50 per gallon mark. The firm framed the recommendation around a recurring pattern it has observed when pump prices cross this psychological threshold.
According to Jefferies, gasoline prices have pierced the $3.50 level multiple times over the past six years. In those instances, the firm says consumer staples growth has typically experienced modest declines in the near term as consumers reallocate spending in response to higher fuel costs.
Jefferies emphasized that those downturns have tended to be temporary, presenting what the firm views as opportunistic entry points for investors. The broker therefore continues to rate several prominent staples stocks as buys.
The firm retains buy ratings on the following large-cap consumer staples names:
- Coca-Cola (NYSE: KO)
- Monster Beverage (NASDAQ: MNST)
- Procter & Gamble (NYSE: PG)
- Clorox (NYSE: CLX)
- Church & Dwight (NYSE: CHD)
Jefferies' view ties movements in gasoline pricing to short-term shifts in consumer purchasing behavior within frequently bought categories, leading the firm to characterize recent weakness as likely to be limited in duration. Investors weighing exposure to staples, in the firm’s assessment, may find the current environment conducive to accumulating shares in the companies listed above.
While Jefferies highlights an historical tendency for only modest and short-lived pullbacks in staples growth around this gas-price milestone, the firm did not provide additional forward-looking estimates or timing for when such recovery might occur. The firm also did not change its stated buy ratings for the named stocks in issuing this advisory.
Clear summary
Jefferies recommends buying selected consumer staples after gasoline prices rose above $3.50 per gallon, noting that past crossings of this level have typically produced modest near-term declines in staples growth that have been short-lived; the firm keeps buy ratings on KO, MNST, PG, CLX, and CHD.