Could a Rotation Into Staples Stocks Be Next? What the Charts Say About 3 Dividend Payers.

A trader on the floor of the New York Stock Exchange. (TIMOTHY A. CLARY/AFP via Getty Images)

Key Points

• The consumer staples sector is the worst-performing S&P sector this year.
• Several staples stocks are beginning to carve out constructive bottoming formations.
• The charts of Lamb Weston, General Mills, and Conagra Brands are examined.

As the bull market rotates leadership across sectors, it may be time for consumer goods stocks to get their turn.

The consumer staples sector, a classic defensive play, has largely sat out the 2025 rally. On a year-to-date basis, it’s essentially unchanged, making it the worst performer among 11 major S&P sectors. The Consumer Staples Select Sector SPDR ETF has formed a bear flag, where a breakdown below $77.50 could trigger a move toward the round $70 level by year end. The ETF is also on the verge of flashing a bearish death cross, with the shorter term 50-day moving average set to undercut the 200-day.

Still, amid these negative technical indicators several stocks are beginning to carve out constructive bottoming formations. Let’s examine three stocks offering attractive risk/reward setups, and healthy dividends to reimburse investors while they wait for a reversal.

The Consumer Staples Select Sector SPDR ETF was trading at $78.14 Friday.

Consumer staples stocks have been left behind in 2025.

Lamb Weston, the largest potato producer in the U.S., is down 6% year to date, and offers a 2.3% dividend yield. The stock still sits about 25% below its 52-week high, even after a sharp 13% gain so far this week, fueled by a well-received earnings report. Notably, its last two earnings reactions delivered powerful surges of 9% and 24% in the weeks ending April 4 and July 25, respectively. Both rallies stalled near the round $60 level but the stock cleared that ceiling this week. It has also broken above a series of lower highs dating back to summer 2023 and decisively negating a bearish head and shoulders formation. With this third attempt appearing to stick above the $60 number, enter here and stay constructive above $57.

Lamb Weston traded at $62.90 Friday.

A potential turnaround is in play for Lamb Weston stock.

General Mills, the iconic branded food icon nearing its 100th anniversary, is having a rough 2025, down more than 20% year to date. That slump has pushed its dividend yield close to 5%. The stock now trades 32% below its 52-week high set last October, and hasn’t posted a three-week winning streak in over a year.

But a closer look at the 10-year weekly chart reveals compelling symmetry, with two major drawdowns in the 45% range, one from 2016—2019 and the other from 2023 to now. The prior example ended up forming a double bottom and it looks like the more recent chart is attempting to do the same. The very round $50 level that provided support in 2017, 2019, and 2020, is once again proving influential, offering a clear risk/reward setup. A rebound toward $75 by the second quarter looks achievable. Consider initiating a position here and stay bullish above $47.

General Mills was trading at $50.55 Friday.

General Mills stock is trading around $50/share with rebound potential.

Conagra Brands, the packaged and processed food company, is also having a tough 2025, down 31% year to date, with its dividend yield now exceeding 7%. The stock sits 37% below its 52-week high and has managed gains in just six of the last 26 weeks. On the three-year weekly chart, technical trouble began with the completion of a bearish evening star pattern near the $40 level in early 2023.

This week, however, the stock was up more than 5% heading into today. If it holds that level it would mark its best weekly performance since March and confirm a bullish morning star pattern. Notably, the first week of August also produced a bullish engulfing candle. A move above the round $20 level would break above a bear flag and support a rally toward $26 in the first half of 2026. Enter here and remain constructive above $17.50.

Conagra traded at $19.25 Friday.

Conagra appears to be bottoming, forming candlesticks on its weekly chart.

Write to Doug Busch at douglas.busch@barrons.com