Don't Buy These Boring Stocks Right Now

The market is going through a "changing of the guard" in 2026...

The biggest winners of recent years are falling. Software stocks are crashing. The Magnificent Seven are down roughly 4% as a group this year, while the overall market is flat.

Meanwhile, boring stocks are soaring, with energy stocks leading the way. And the market's most boring sector is up 13% this year... breaking out to a new 52-week high in the process.

Normally, a move like that is a clear sign to buy. But as we'll see, this is one breakout you shouldn't chase.

Buying After This New High Is a Risky Move

Most investors hate the idea of buying stocks after they hit new highs. It feels like you've missed the rally. But that's rarely the case.

Instead, sticking with the trend and buying major breakouts is usually a smart strategy.

When an asset is rising, it tends to keep rising. When stocks break out to new highs, prices tend to keep moving higher.

This rule of thumb doesn't always work, though... especially in boring areas of the market like consumer staples.

Consumer-staples companies sell the essential products of daily life – groceries, household supplies, and personal hygiene items like toothpaste. Think about companies like Walmart (WMT), Procter & Gamble (PG), and Coca-Cola (KO). Their products never go out of style.

These aren't exciting, high-growth businesses. So they tend to lag when the market booms.

That's not the case today, though. These stocks have soared in 2026. And by looking at the State Street Consumer Staples Select Sector SPDR Fund (XLP), we can see that they staged a major breakout in the process. Take a look...

At the start of 2026, consumer-staples stocks were trading below their 2022 high... But in recent weeks, they've gone vertical.

That surge pushed the sector to a new 52-week high. But history shows that for this boring group, chasing breakouts is a recipe for underperformance. To see it, we looked at data for XLP's underlying index going back to 1989...

Consumer staples might be boring, but they've delivered a healthy 8.1% annual return over nearly 40 years. So you can make decent gains from buying and holding this sector.

That's not the case with buying the breakouts. Historically, that strategy has led to a less-than-stellar 2.9% return over six months... and a 5.7% return over a typical year.

The setup is even worse today, though. Despite being boring and low-growth, consumer staples are expensive right now. We can see it by looking at the forward price-to-earnings (P/E) ratio, which values stocks based on expected future earnings...

Earnings aren't growing much for this group of stocks. Instead, prices are rising... and valuations are stretching with them. Consumer staples haven't been this expensive since 1999.

That's not a good sign. It makes buying today about as risky as it gets for this otherwise boring group.

History shows that a major breakout isn't enough to support consumer-staples stocks. Put it together, and this is one sector you shouldn't chase higher right now.

Good investing,

Brett Eversole