Even at this early stage, 2026 is already shaping up to be very different from the last several years…
Gritty “old economy” stocks are leading the market while Wall Street fears that Big Tech’s yearslong data center spending spree could end in an epic earnings letdown .
Four behemoths in this space – Amazon (AMZN), Alphabet (GOOGL), Meta Platforms (META) and Microsoft (MSFT) – have announced plans to spend $650 billion on AI infrastructure in 2026, marking a 60% increase from last year’s record amount of spending.
Meanwhile, after years of feeling the weight of stubbornly high inflation, consumer staples are suddenly making a resurgence. This year, the State Street Consumer Staples Select Sector SPDR ETF (XLP) is up nearly 13% while the S&P 500 is barely positive.
Consumer staples have a reputation for being dull –a sector known for selling everyday products like soda pop and disposable razors – but there is nothing boring about the returns of the leading staples stocks.
For example, Walmart (WMT) just joined the trillion-dollar market cap club – becoming only the second nontech American company to do so after Warren Buffett’s Berkshire Hathaway (BRK-B). WMT shares are up 145% since the beginning of 2024, roughly tripling the returns of the S&P 500.
That means might there be some other gems in this sector yet to be discovered. Let’s take a look…
A Peek Under the Hood
We’ll want to be choosy when exploring this space. The consumer staples sector as a whole really does not rate well on my Green Zone Power Ratings system. In fact, 26 out of the 42 stocks in the sector rate as “Bearish” on my system and another 10 rate as “Neutral.”
Only a select few rate as “Bullish.”
While the sector is off to a great start this year, the factors driving its underperformance – sticky inflation, tapped out consumers, etc. – haven’t exactly gone away. That’s why we must focus our attention on the companies best positioned to navigate the affordability crisis, or even benefit from it as shoppers look to trade down to save money.
But first, let’s dive deeper into my system so we can understand which factors impact consumer staples the most.
Where Do Consumer Staples Pick Up Points?
One thing to keep in mind about consumer staples products is the importance of maintaining a brand. There are few symbols more universally recognized that the McDonald’s golden arches, the Nike swoosh, or Starbuck’s green mermaid logo. A strong brand is an intangible asset that allows a company to charge a premium over its peers.
So, it’s not all that surprising to see that consumer staples stocks rate exceptionally well on quality today, with 31 out of 42 rating as “Bullish” on the factor.
Given that consumer staples tend to be stable to the point of being boring, it also stands to reason that they rate well on my volatility factor. As you can see, 30 rate as “Bullish” on volatility. (Remember, a high volatility score means that the stock exhibits low volatility and doesn’t bounce around much relative to the broader market.)
After that, the factor scores start to trail off a little. The sector has been thriving so far in 2026, but that outperformance is too recent to really show up in my momentum factor.
I also wouldn’t expect most of these companies to score particularly well on growth. Demand for staples is stable – the products are typically used and replaced – but there’s no real catalyst for explosive growth. It’s hard to imagine a scenario where the world suddenly needs a massive influx of shampoo or deodorant.
Stocks that rate well on quality often rate poorly on value. That stands to reason given that investors are generally willing to pay a premium for high-quality stocks. We see this in the sector today, as only seven of 42 staples stocks rate as “Bullish” on value.
Only the Best
Let’s take a deeper look at the six stocks that rated as “Bullish” overall.
At the top of the list is energy drink maker Monster Beverage (MNST). Of course, members of my InfiniteMomentum Alert will be no strangers to Monster… I added it to the portfolio last summer, and it’s up about 25% since I recommended it.
Moving down the list, we see a recurring theme. The consumer staples stocks that rate the best are those helping Americans beat the affordability crisis like discount retailer Dollar General (DG) and off-price leaders Ross Stores (ROST) and TJX Companies (TJX) – owner of the T.J. Maxx chain.
Both Ross and TJX have been mentioned in What My System Says Today various times over the past several months. As I noted back in November,
Shoppers flock to discount chains like T.J. Maxx or Ross when their budgets are tight. With inflation still stubbornly high and the labor market looking a little shaky, this is exactly the kind of environment these chains are made for. Both stocks have been trending higher for months.
It was true then, and it’s no less true today. Both continue to rate as “Bullish” and rate particularly well on momentum, volatility and quality.
To good profits,
Adam O’Dell
Editor, What My System Says Today
