Consumer Staples Stocks to Avoid: SunOpta, USANA, and PepsiCo

Consumer staples stocks, often considered safe bets in choppy markets, have pulled back 10.6% over the past six months. Three stocks that fall short include SunOpta (STKL), USANA (USNA), and PepsiCo (PEP), due to declining sales, smaller revenue base, commoditized products, high competition, direct selling model, revenue declines, and declining unit sales. These stocks are not exciting investments, and investors should tread carefully.

Consumer staples stocks, often considered safe bets in choppy markets, have pulled back by 10.6% over the past six months. This drop was particularly disheartening since the S&P 500 held its ground. Among the consumer staples sector, several stocks have shown signs of weakness, indicating that not all businesses are created equal. Three notable examples are SunOpta (STKL), USANA (USNA), and PepsiCo (PEP).

SunOpta (STKL) has faced significant challenges, with sales declining by 4.2% annually over the last three years. The company's smaller revenue base of $742.7 million means it hasn't achieved the economies of scale that some industry juggernauts enjoy. Additionally, commoditized products, bad unit economics, and high competition are reflected in its low gross margin of 16%. At $5.98 per share, STKL trades at a forward P/E of 30x, making it less attractive for investors [1].

USANA (USNA), which operates with a direct selling model, has experienced annual revenue declines of 8.7% over the last three years. Its revenue base of $876.2 million puts it at a disadvantage compared to larger competitors. Earnings per share decreased by more than its revenue over the last three years, indicating that each sale was less profitable. USANA's stock price of $30.35 implies a valuation ratio of 11.2x forward P/E, making it a less exciting investment [1].

PepsiCo (PEP), a household name in food and beverages, has also faced challenges. Its large revenue base makes it harder to increase sales quickly, with annual revenue growth of 4.2% over the last three years being below the sector's standards. Declining unit sales over the past two years indicate soft demand, potentially requiring a revision of its product strategy. The company's estimated sales for the next 12 months are flat, further raising concerns. At $129.19 per share, PEP trades at a forward P/E of 15.5x, making it a less attractive investment [2].

Investors should tread carefully when considering these stocks. While consumer staples are generally safe bets, not all companies within the sector are equally resilient. It's crucial to conduct thorough research and consider the unique challenges faced by each company before making investment decisions.

References:
[1] https://stockstory.org/us/stocks/nasdaq/stkl/news/buy-or-sell/3-consumer-stocks-in-hot-water
[2] https://www.marketbeat.com/instant-alerts/filing-oppenheimer-co-inc-lowers-stake-in-pepsico-inc-nasdaqpep-2025-06-23/