Why Consumer Staples Stocks Lamb Weston, Conagra, and Philip Morris Rallied Today Even as the Market Plunged

Shares of consumer staples giants Lamb Weston (NYSE: LW), Conagra (NYSE: CAG), and Philip Morris International (NYSE: PM) all rallied today, up 9.7%, 1.5%, and 4%, respectively. The results were all the more notable as the S&P 500 index plunged 4.8% following yesterday's tariff announcements.

Lamb Weston is a large producer and distributor of frozen potato products to restaurants and supermarkets -- essentially, french fries. Conagra sells branded food products under various familiar brands like Slim Jim, Healthy Choice, Bird's Eye, Duncan Hines, and others. And Philip Morris is the well-known cigarette and tobacco producer.

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The common thread among these three stocks is that they are considered defensive and recession-resistant. So, it's not surprising on a day like today, when the market is fearing a global recession due to yesterday's sweeping tariff announcements, that investors are selling economically sensitive stocks and piling into these seemingly recession-resistant plays.

In addition, both Lamb Weston and Conagra actually reported earnings today, reiterating their full-year guidance, therefore likely reassuring investors further.

Why these "unexciting" stocks were very exciting today

In its fiscal third quarter, Lamb Weston delivered 4% sales growth and earnings-per-share growth of just under 2% to $1.03, with both figures beating analyst expectations. But perhaps just as important, Lamb Weston also reaffirmed its full-year outlook despite yesterday's tariff news. In addition, management highlighted the company's significant cost savings it would see as a result of a large restructuring plan it announced late last year.

On the other hand, Conagra is up despite missing estimates for both revenue and EPS. The company actually saw sales fall 6.3% in its fiscal third quarter, while adjusted (non-GAAP) earnings per share fell 23.1% to $0.51. However, management also reiterated its full-year 2025 outlook of 2% sales declines and EPS of $2.35.

Management highlighted that the problem last quarter was actually one of supply constraints hampering shipments to retailers, not end demand, where management noted consumption trends remain strong. So, that's perhaps why the stock rallied even though reported results missed.

And while there was no company-specific news for Philip Morris, tobacco products are often thought to be recession-proof, given the addictive nature of cigarettes and vapes, as well as increased usage when people become anxious. Oh, and Philip Morris' juicy 3.5% dividend yield isn't too shabby either, especially as the long-term Treasury bond rates are coming down today, due to investors buying "safe haven" assets.

This is why diversified investors own consumer staples

Consumer staples stocks are not often exciting, as they generally post limited growth. However, today highlights why they can be a very valuable part of a diversified portfolio. Not unlike bonds, these stocks tend to hold their value in a recession scenario, given that people still need to eat and smoke, and that these companies tend to pay out steady dividends in good times and bad.

Especially for older investors in or nearing retirement, top consumer staples stocks would be a prudent place to stash your investment dollars today and in the near to medium term, given all the economic uncertainty.

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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.