3 Consumer Stocks with Questionable Fundamentals

Regarded as defensive investments, consumer staples stocks are generally safe bets in choppy markets. But they’re also double-edged swords as they often lag in booming conditions, and this pattern has persisted recently. Over the past six months, the industry has recorded a loss of 5%, a far cry from the S&P 500’s 9.6% ascent.

Some companies can buck this trend, but the odds aren’t great for the ones we’re analyzing today. On that note, here are three consumer stocks we’re passing on.

Boston Beer (SAM)

Market Cap: $2.19 billion

Known for its flavorful beverages challenging the status quo, Boston Beer (NYSE:SAM) is a pioneer in craft brewing and a symbol of American innovation in the alcoholic beverage industry.

Why Are We Cautious About SAM?

1. Flat sales over the last three years suggest it must innovate and find new ways to grow
2. Subscale operations are evident in its revenue base of $1.98 billion, meaning it has fewer distribution channels than its larger rivals
3. Projected sales for the next 12 months are flat and suggest demand will be subdued

Boston Beer’s stock price of $215.67 implies a valuation ratio of 20.3x forward P/E. Check out our free in-depth research report to learn more about why SAM doesn’t pass our bar.

General Mills (GIS)

Market Cap: $23.71 billion

Best known for its portfolio of powerhouse breakfast cereal brands, General Mills (NYSE:GIS) is a packaged foods company that has also made a mark in cereals, baking products, and snacks.

Why Do We Think Twice About GIS?

1. Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
2. Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
3. Free cash flow margin dropped by 4.6 percentage points over the last year, implying the company became more capital intensive as competition picked up

At $44.46 per share, General Mills trades at 11.9x forward P/E. Dive into our free research report to see why there are better opportunities than GIS.

Hormel Foods (HRL)

Market Cap: $13.44 billion

Best known for its SPAM brand, Hormel (NYSE:HRL) is a packaged foods company with products that span meat, poultry, shelf-stable foods, and spreads.

Why Do We Avoid HRL?

1. Falling unit sales over the past two years imply it may need to invest in product improvements to get back on track
2. Easily substituted products (and therefore stiff competition) result in an inferior gross margin of 16.4% that must be offset through higher volumes
3. Sales over the last three years were less profitable as its earnings per share fell by 9.2% annually while its revenue was flat

Hormel Foods is trading at $24.50 per share, or 16.8x forward P/E. To fully understand why you should be careful with HRL, check out our full research report (it’s free).

Stocks We Like More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.