Clorox, General Mills, and Constellation Brands Are Down Between 22% and 33%. Here's the Stock to Buy, Even if the Fed Keeps Hiking Interest Rates.

Consumer goods stocks are supposed to be the boring, reliable part of a portfolio: People buy detergent, toothpaste, and other everyday products in good times and bad. But that reputation has taken a beating this year. Clorox (NYSE: CLX), General Mills (NYSE: GIS), and Constellation Brands (NYSE: STZ) are all down double digits from their highs -- each for very different reasons.

Higher interest rates make the comparison more useful, not less, because they raise the bar for what "safe" actually means: A company has to generate real cash and not lean too hard on debt to keep paying its dividend. Only one of these three clears that bar comfortably right now.

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Clorox is fixing problems it created for itself

Clorox stock has fallen roughly 35% over the past year, with about half of that coming in just the past month. The company cut its full-year outlook, citing inflation, supply chain strain, and early costs from digesting its purchase of hand sanitizer maker GOJO, per The Wall Street Journal. Clorox did just raise its dividend again in late September, which suggests management isn't worried about the payout. But a guidance cut paired with a shrinking gross margin tells me the business still has real integration work ahead of it over the next couple of quarters, and I'd rather watch that play out from the sidelines before trusting the stock with new money.

General Mills is rebuilding the plane while flying it

General Mills stock is down roughly 22% so far this year, and the moves it's made lately read like a company trying to become something different. It has completely sold off its U.S. and Canadian yogurt businesses, agreed to divest its Brazil operations, and is exiting its Häagen-Dazs shops in mainland China, while steering investment toward premium pet food and smaller, faster-growing brands. Chief Executive Officer Jeff Harmening has said new acquisitions aren't a priority right now, since paying down debt comes first, according to Food Dive.

That discipline is admirable, but it's also why I'm not ready to buy in. General Mills' dividend now eats up close to three-quarters of its free cash flow. Reshuffling a portfolio while the cash cushion behind the dividend keeps shrinking is a tougher setup in a world of expensive debt than starting from a clean balance sheet.

3. Constellation Brands is the one built to handle higher rates

Constellation Brands, the company behind Modelo, Corona, and Pacifico, just hit a new 52-week low, weighed down by proposed tariffs on Mexican imports that could raise costs on its best-selling beers. That's a real risk. But look at what the company has been doing with its money: Last year, it authorized a new three-year, $4 billion stock buyback, on top of its dividend, and in September, it redeemed $600 million of debt early rather than waiting for the notes to mature. That's a company choosing to enter a higher-rate environment with less debt, not more.

Constellation's operating margin also sits around 31%, roughly double the median for its consumer staples peers, per Trefis. Higher rates hurt companies that need to keep refinancing debt or leaning on promotions to move product. Constellation is doing the opposite on both counts.

The stock to buy if the Fed messes with rates

Of the three, Constellation Brands is the one I'd buy today. The tariff overhang is real and could pressure the stock further in the short term, so this isn't a bet on a quick bounce. It's a bet that a company paying down debt, buying back shares, and pushing toward its most profitable brands is better positioned to ride out a higher-rate world than one still cleaning up its own acquisition or one whose stock is essentially spoken for by someone else's takeover.

There's also something simpler underneath all of this: People drink, and brands like Modelo and Corona have built the kind of brand loyalty that doesn't evaporate because borrowing costs went up. A recession or a stretch of high rates can push a shopper to buy the store-brand cereal instead of a name brand, but it rarely talks a longtime Modelo or Corona drinker into switching beers. That kind of demand durability matters more, not less, when interest rates stay elevated, because it's what lets Constellation keep generating the cash it's using to pay down debt and buy back stock in the first place.

Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Brands. The Motley Fool has a disclosure policy.