Hershey Stock And 2 US Consumer Staples Picks For Higher Rates

Higher for longer interest rates, stickier inflation, and a reduced chance of a US recession are reshaping how investors think about US consumer staples stocks. With inflation forecasts at 3.4% for headline CPI and 3.2% for core PCE, and economic growth expectations at 2.1%, reliable cash flows and resilient demand look different than they did a year ago. This article examines how that mix of stronger growth, persistent inflation, and fewer expected Fed rate cuts could affect large US consumer staples companies, and highlights 3 stocks from our screener that appear well aligned with these conditions.

Lamb Weston Holdings (LW)

Overview: Lamb Weston Holdings is a major frozen potato producer that supplies french fries and related snacks to quick service and full service restaurants, retailers, and foodservice distributors across North America and international markets under its own brands and private labels.

Operations: Lamb Weston generates about US$4.3b of revenue from North America and US$2.2b from International operations, reflecting a business anchored in the US with a substantial global footprint in frozen potato products.

Market Cap: US$6.4b

Investors looking at Lamb Weston are getting exposure to a global supplier of frozen potatoes that serves everyday food categories, which tend to be relatively steady when economic growth, inflation and interest rates all sit at elevated but stable levels. The company is working on cost cuts, automation and international plant closures to improve efficiency. Analysts have highlighted potential improvement in return on equity from 16.4% toward 23.5%. At the same time, high debt, a recent US$130.5m one off loss and ongoing legal and governance questions mean execution is important. The stock currently trades well below Simply Wall St’s DCF estimate, so the key question is whether that discount reflects risk or opportunity.

Rising efficiency plans, a wide frozen potato footprint and a stock price below Simply Wall St’s DCF estimate put Lamb Weston at an interesting crossroads, but the real twist sits inside the DCF valuation analysis for Lamb Weston Holdings

Estée Lauder Companies (EL)

Overview: Estée Lauder Companies is a global beauty group that creates and sells premium skin care, makeup, fragrance, and hair care products, spanning well known brands such as Estée Lauder, Clinique, M·A·C, La Mer, Jo Malone London, TOM FORD, and The Ordinary across both physical retailers and online channels.

Operations: Estée Lauder generates about US$7.2b from skin care, US$4.2b from makeup, US$2.7b from fragrance, and US$566m from hair care, with Asia/Pacific and the Americas each contributing more than US$4.4b in reported revenue.

Market Cap: US$29.9b

Estée Lauder sits at the intersection of everyday beauty routines and luxury brands. This can be attractive when inflation, growth and interest rates all stay relatively firm and consumers still prioritize skin care and makeup. The company is working through a turnaround built on emerging market expansion, higher margin digital sales and a multi year restructuring program. At the same time, it is also dealing with weak travel retail, high restructuring charges, and meaningful debt. Recent earnings and index inclusions have supported sentiment, but profitability is still rebuilding and analyst expectations assume a material improvement in margins and earnings over the next few years. The real question is how much of that recovery story is already reflected in the current share price.

Estée Lauder’s recovery story is rebuilding, but the real tension sits in whether today’s price already bakes in that earnings comeback or not. It is worth reading the analyst forecasts for Estée Lauder Companies to see what might be hiding in the fine print.

Hershey (HSY)

Overview: Hershey is a global confectionery and snacks company that sells chocolate, sweets, gum, mints, salty snacks, protein bars, and pantry items under brands like Hershey’s, Reese’s, Kisses, Kit Kat, SkinnyPop, and Dot’s through major retailers, wholesalers, and convenience channels in the US and around 65 other countries.

Operations: Hershey generates most of its revenue from North America Confectionery at about US$9.7b, with additional contributions from North America Salty Snacks at about US$1.3b and International at about US$1.0b, and total sales of roughly US$10.5b in the United States and US$1.5b from other countries.

Market Cap: US$35.2b

Hershey gives investors exposure to everyday treats and snacks, and the story is more complex than a pure comfort food play. The company is expanding in salty snacks and better-for-you options while rolling out new Reese’s products and protein bars. At the same time, management is working to address high cocoa and tariff costs through pricing, productivity initiatives, and supply chain investments. Analysts currently see potential for earnings to improve from present pressure, but cocoa price volatility, a relatively high debt load, and a dividend that is not fully covered by earnings all contribute to the overall risk profile. The balance between resilient brands, input cost dynamics, and these financial trade-offs is central to the broader Hershey narrative.

Hershey’s earnings pressure, cocoa costs and dividend coverage issues make the story feel crowded, but the real tension sits inside the analysis report for Hershey where brand strength and balance sheet risks intersect in surprising ways.

The three consumer staples stocks in this article are just a starting point. The full US Consumer Staples Stocks screener uncovers 9 more US companies whose cash flow profiles, balance sheets, and risk factors tell equally compelling stories. Use Simply Wall St to identify, compare, and analyze the specific catalysts and narratives that matter most to you so you can focus on the highest conviction opportunities in this corner of the market.

Take Control of Your Investment Journey

If Hershey or any of these companies sound like a great opportunity, register for FREE with Simply Wall St and add your companies to a Watchlist to monitor the share price against the fair value the ideal entry point. Once you've made your move, manage your holdings with our Portfolio Command Center that filters out the noise to deliver only the most critical, actionable updates. Throughout your journey, our Community allows you to filter the best ideas from thousands of investor perspectives. By uncovering hidden catalysts and risks early, you'll accelerate your decision-making and stay one step ahead of the market.

Seeking Fresh Alternatives Before Momentum Flies

Fresh stock ideas can move quickly, and the strongest setups often break out before most investors notice. Scan these curated picks while they are still under the radar for now and consider them promptly.

• Identify cash-rich businesses that still look overlooked by the market by running the list of solid balance sheet and fundamentals (47 results).
• Explore income opportunities that could help steady a portfolio by checking out the 9 dividend fortresses before yields change.
• Review the buildout of next generation energy infrastructure at an early stage by scanning the 89 nuclear energy infrastructure stocks while sentiment continues to develop.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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