The stock market has gone through tough times so far in 2016, but consumer stocks are displaying their defensive credentials, falling far less than the overall market. With the companies behind some of America's best-loved brands trading at attractive valuations, we asked three of our analysts to identify the one consumer goods stock they would buy before any other. Their choices: Mead Johnson Nutrition  (MJN), PepsiCo (PEP 0.56%) and Procter & Gamble (PG -0.32%).

Consumer staple stocks have outperformed the broad market this year.

Alex Dumortier (Mead Johnson Nutrition): Shares of Mead Johnson Nutrition sold off on Monday, losing 5.2% versus just 1.4% for the S&P 500. What was the news that prompted that markdown? I could find no relevant information to explain that price action.

In fact, the maker of infant formula has badly lagged the broader market and its sector over the past twelve months, and has not fulfilled a defensive role. However, that underperformance is setting up an attractive long-term opportunity for the business-focused investor.

I've been banging the drum on this stock since early August and I continue to think it's an overlooked gem which boasts:

  • A well-established brand in an oligopolistic market (to use Warren Buffett's expression, it has an "economic moat"). The Food and Drug Administration regulates infant formula and, logically, the regulatory burden is heavier than for ordinary food, as formula "is often used as the sole source of nutrition by a vulnerable population during a critical period of growth and development."

In June 2014, the FDA enacted stricter rules covering the manufacturing of infant formula, making it even more difficulty for would-be entrants into this market, to the benefit of incumbent manufacturers.

  • Superb profitability along any metric you choose. An economic moat is the source and sustenance of profits, and Mead Johnson illustrates that principle. For example, average return on invested capital over the past five years is a stellar 39% (unweighted), according to data from Bloomberg.

At just under 20 times the current year's earnings-per-share estimate, shares of Mead Johnson sport an above-market multiple, but this is not an average company and it deserves a premium multiple. Furthermore, that multiple is in line with the median for its North America Packaged Food peer group (20.7), according to data from Bloomberg.

Companies of the quality of Mead Johnson almost never get screamingly cheap, and that is not where we are today. Nevertheless, paying fair value (or a bit below) to own a piece of this company ought to yield very satisfactory (read: market-beating) results over the long term -- investors ought to consider adding Mead Johnson Nutrition to their portfolios. 

Keith Noonan (PepsiCo): There are lots of companies in the consumer goods sector worthy of investment consideration, but when asked to narrow it down to just one, my criteria for selection shift considerably. In volatile market conditions, companies with strong brands and established histories of returning income to investors have historically been the best performers, and PepsiCo gets top marks in both those categories.

The company has a wealth of well-established and highly regarded products, with 22 individual  brands that each generate over $1 billion in annual retail sales, including standouts such as Tropicana, Quaker, and Aquafina, in addition to its famous sodas and Frito-Lay snack brands. On the dividend side, Pepsi's yield sits at roughly 2.9%, which is comfortably above both the S&P 500's average yield of roughly 2.3% and the 10-year Treasury's yield of roughly 1.7%. Further, the company has raised its payout for 43 years running. Pepsi has also raised its payout by more than 43% over the last five years, and more than 170% over the last 10 years, and has a history of big dividend increases during periods of market difficulty.

Declines in domestic soda sales represent a potential obstacle to future payout increases (Pepsi's payout ratio sits at 61.6%, so momentum in revenue, earnings, and free cash flow will likely be needed to deliver sustained dividend boosts), but opportunities in developing markets and the company's history of innovation do a lot to minimize the risk profile.

With a forward P/E value of roughly 20, PepsiCo is right in line with the average for the packaged foods industry, and an attractive dividend profile combined with strong company history make it one of the top stocks in the consumer goods sector.

Tamara Walsh (Procter & Gamble): The stock market is entering bear territory and investors are beginning to worry. However, Procter & Gamble is a high-quality company that can offer long-term investors a margin of safety in an otherwise turbulent market. For starters, P&G has been in business for 178 years. This means the consumer packaged goods company has weathered everything from the Great Depression to numerous stock market crashes. It seems to have emerged from each challenge a stronger, more nimble company.

This remains true today. Management is in the process of selling nearly 100 of P&G's underperforming brands,  streamlining operations and making for a more agile business going forward. Meanwhile, the company will hold onto nearly 65 of its most profitable brands (think Pampers and Tide). The names it is keeping will include 21 leading brands, which each produce between $1 billion and $10 billion in annual sales for the company.  This means Procter & Gamble should have no problem generating strong cash flow in the future.

On top of this, investors can rest easy knowing that P&G will continue to reward them through dividends and share buybacks. Not only has it increased its dividend for the past 59 years straight , but it has also paid a dividend for 125 years without fail.  Not many companies can offer that level of reliability when it comes to putting shareholders first. With more than $70 billion in net sales and nearly $12 billion returned to shareholders in 2015 , Procter & Gamble is a solid blue-chip stock that investors can own confidently despite volatile market conditions.