Small-cap staples bargains: A-rated valuations, positive growth (XLP)

Four small-cap consumer staples stocks passed a screen that filters for top-tier valuation ratings and positive year-over-year revenue growth: USANA Health Sciences (USNA), Flowers Foods (FLO), Herbalife Nutrition (HLF), and Energizer Holdings (ENR).

The screen targets companies in the consumer staples sector with market capitalizations between $300 million and $2 billion. It assigns an A or A+ grade for valuation based on price-to-earnings and price-to-sales ratios relative to peers and each company's own history. Only stocks with positive trailing twelve-month revenue growth make the cut.

USNA makes nutritional supplements and skincare products sold through a network of independent distributors. FLO produces packaged baked goods under brands like Nature's Own and Wonder Bread. HLF sells weight management and dietary supplements through a direct sales model. ENR manufactures batteries and portable lighting.

The simple take is that these stocks offer defensive exposure at cheap prices. The better read is that cheap valuations can persist when revenue growth is low or decelerating. The screen does not weight growth quality or cash flow durability. HLF carries debt and regulatory risk that the valuation grade does not capture. USNA's direct sales model has drawn scrutiny in some markets. FLO's margins are sensitive to wheat and energy costs. ENR faces competition from private-label batteries and input cost pressure from metals and plastics.

The valuation grade uses a composite of price-to-earnings, price-to-sales, and price-to-book ratios. It compares each stock to its sector median and to its own five-year average. A stock trading below both benchmarks earns an A grade. The revenue growth filter requires positive year-over-year growth in the most recent quarter. It does not require sequential growth or accelerating trends. A stock can pass with low single-digit growth.

Consumer staples as a sector have lagged the broader market in 2025. Investors favored growth stocks. The screen's valuation grades reflect low multiples. The revenue growth filter helps. Revenue can grow while margins shrink. FLO has been cutting costs to protect margins amid inflation. ENR has focused on new products and cost savings to offset raw material pressure.

Small-cap stocks carry additional risks. They tend to be less liquid than large caps, which can widen bid-ask spreads and make position sizing harder. They also face higher volatility, especially in a sector like consumer staples where earnings can be sensitive to input costs. The screen does not adjust for these factors.

Traders using this screen can check broader stock market analysis for sector rotation signals. They should also layer on balance-sheet checks and insider transactions. A low price-to-earnings ratio is less attractive if free cash flow is weak. Recent insider buying can signal that management sees value at current prices.

The screen does not filter for dividend yield, a common consideration in consumer staples. FLO and ENR both pay dividends. The yield may be modest. Investors seeking income should check payout ratios and dividend growth history.

The screen also flags exchange-traded funds that track the small-cap consumer staples space. The Consumer Staples Select Sector SPDR Fund (XLP) concentrates on large caps. For small-cap exposure, funds like the Invesco S&P SmallCap Consumer Staples ETF (PSCC) or the iShares U.S. Consumer Staples ETF (IYK) may be more targeted. PSCC charges about 0.29% in expenses and holds a diversified basket of small-cap staples. IYK has a 0.40% expense ratio and includes larger names. Expenses and liquidity matter before trading.

Before buying, run each name through a liquidity and debt check. The screen finds candidates, not convictions.