Industry Overview - Energy drink companies manufacture beverages designed to enhance energy, focus, and endurance, including clean-label, low-sugar, and plant-based options, as well as traditional energy drinks and functional wellness beverages [1] - Key industry trends include rising health consciousness, increasing demand for low- or no-sugar options, and a growing overlap with sports nutrition and lifestyle wellness categories [1] Investment Opportunities - Despite challenges such as regulatory scrutiny, competition, and shifting consumer preferences, energy drink companies present compelling investment opportunities due to strong global brands, high profit margins, and a focus on innovation [2] - Two energy drink stocks with favorable Zacks Rank for 2026 are Monster Beverage Corp. (MNST) and PepsiCo Inc. (PEP), both expected to provide stability and steady returns [3] Company Performance: Monster Beverage Corp. - Monster Beverage has a Zacks Rank of 1 and is benefiting from the expanding energy drinks market and product launches, with sales in the Monster Energy Drinks segment growing 16% on a currency-adjusted basis in Q3 2025 [6][7] - The company has an expected revenue growth rate of 9.3% and an earnings growth rate of 12.8% for the next year, with the Zacks Consensus Estimate for next year's earnings improving by 4.7% over the last 30 days [7] Company Performance: PepsiCo Inc. - PepsiCo has a Zacks Rank of 2 and is experiencing strong international beverage revenue growth, particularly in markets like Mexico, Brazil, Germany, and Thailand [10] - The company has an expected revenue growth rate of 3.3% and an earnings growth rate of 5.9% for the next year, with the Zacks Consensus Estimate for next year's earnings improving by 0.2% over the last 30 days [12] - PepsiCo's long-term strategy focuses on productivity through automation, standardization, and digital transformation to enhance efficiency and support margin expansion [11]

Core Insights - Wall Street continues its strong performance in 2025, but the consumer staples sector is lagging, with the Consumer Staples Select Sector SPDR (XLP) down 1.7% year to date, the only sector in the S&P 500 Index in the red [1][2][8] Consumer Staples Sector Overview - The consumer staples sector is facing challenges due to rising living costs, which are impacting household budgets and leading to cautious consumer spending, resulting in margin compression [2] - Despite the overall sector's poor performance, five consumer staples stocks are highlighted for their potential to perform well in 2026: PepsiCo Inc. (PEP), Monster Beverage Corp. (MNST), Lamb Weston Holdings Inc. (LW), United Natural Foods Inc. (UNFI), and Ollie's Bargain Outlet Holdings Inc. (OLLI) [3][8] Company-Specific Insights PepsiCo Inc. (PEP) - PepsiCo, with a Zacks Rank of 2, is benefiting from strong beverage performance in international markets, particularly in Mexico, Brazil, Germany, and Thailand [6] - The company is focused on localizing flavors, expanding price-pack options, and enhancing productivity through digital transformation, with expected revenue and earnings growth rates of 3.3% and 5.6% for next year [7][9] Monster Beverage Corp. (MNST) - Monster Beverage, ranked 1, is capitalizing on the expanding energy drinks market, with a 16% sales growth in its energy drinks segment in Q3 2025 [10][11] - The company has expected revenue and earnings growth rates of 9.3% and 12.8%, respectively, for next year, supported by improving margins and easing supply-chain pressures [11] Lamb Weston Holdings Inc. (LW) - Lamb Weston, also ranked 1, is driving growth through its "Focus to Win" strategy, emphasizing operational efficiency and innovation [12] - The company expects a 4.1% volume increase year over year in fiscal 2026, with revenue and earnings growth rates of 1.3% and -6.3% for the current year [13] United Natural Foods Inc. (UNFI) - United Natural Foods, ranked 1, is showing strong growth driven by demand for natural and organic products, with strategic initiatives enhancing efficiency and service quality [14][15] - The company has an expected revenue growth rate of 2.5% and over 100% earnings growth for the current year, with a significant 24.2% improvement in earnings estimates over the last 60 days [16] Ollie's Bargain Outlet Holdings Inc. (OLLI) - Ollie's, with a Zacks Rank of 2, is leveraging a cost-effective business model and strategic investments to support growth, expecting a 16.3% revenue increase and 16.2% adjusted earnings per share improvement in fiscal 2025 [17][18] - The company plans to expand its store network significantly, aiming for over 1,300 stores, with a consistent CAGR of 9.5% from fiscal 2020 to fiscal 2024 [19][20]