5 Stocks Ready to Bounce Back

Editor's note: A previous version of this article had incorrect data in the table below. The Fool regrets the error.

However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with rising CAPS ratings.

Among the 238 stocks in CAPS' consumer goods sector, we've unearthed a handful with top four- and five-star ratings. Those accolades mean our 130,000 CAPS investors are confident that these stocks will beat the market in the months ahead:

Company

CAPS Rating Today

Recent Price

52-Week Price Change

Est. LT Growth Rate

Philip Morris (NYSE: PM  )

*****

$40.05

(24%)

9%

Procter & Gamble (NYSE: PG  )

*****

$50.37

(25%)

9%

Unilever (NYSE: UL  )

*****

$22.13

(35%)

8%

Sadia (NYSE: SDA  )

*****

$6.60

(71%)

175%

Fuqi International (Nasdaq: FUQI  )

****

$7.39

(22%)

20%

Source: Motley Fool CAPS; Yahoo! Finance.

Consumer goods is a broad classification, covering everything from brewers such as Molson Coors (NYSE: TAP  ) to personal-care giant Colgate-Palmolive (NYSE: CL  ) . Although the sector has a reputation for weathering tough times, many of its players have fallen in the current market. Rare exceptions do persist; pretzel maker J&J Snack Foods has grown more than 32% over the past 12 months, for example.

Considering that the average company in the sector lost roughly 31% of its value over the past year, let's take a closer look at why investors might think some of the companies listed above are overdue to hit bottom and rise again.

Some spring in its step
Over the past 100 years, stocks have returned an annual average of nearly 8% -- and of that amount, fully 5% resulted from dividends. That mind-boggling statistic showcases the amazing power of dividend-paying companies.

Procter & Gamble has offered a dividend since 1890, and it recently announced its 53rd consecutive increase, boosting the payout 10%, from $0.40 to $0.44 per share. As others are cutting dividends, the company's heftier dividend indicates a strong underlying business -- and contradicts the weakness exhibited by its stock chart.

The maker of Crest, Tide, and Pampers should benefit from the potential growth found in emerging markets over the coming years; right now, roughly 60% of its revenue comes from outside the U.S.

Even as unemployment rises and consumers rein in their spending, P&G investors seem to have accounted for both those factors. At 12 times next year's earnings, with an expected long-term growth of 9%, the consumer-products specialist seems poised to benefit from increased demand. CAPS member foolishlymeek outlines the keys to the brand giant's future:

Diversity of products, with most of them being essential consumer items and household names - Charmin, Tide, Downy, Frebreze, Secret, Cover Girl, Dawn, Gain, Pampers, Bounty, Olay, Gillette, Braun, Iams, Metamucil, Vicks, Max Factor, Crest, Pringles, Puffs, Scope, Cascade, Bounty, Head & Shoulders, Luvs, OralB, Pantene!Over 75 brands-just in the United States!

My consumers are brand loyal to these products. EVERYONE needs these items - whether ... the market is up or down. Can't afford Pantene Shampoo, buy Aussie, or Herbal Essence. Olay soap is too expensive at the moment, try Ivory, Camay, Safeguard, or Zest. Diapers expensive? Whether you buy Pampers or Luvs, it's still a P&G product. Use Bounce, Downy, Tide, Gain, Era, Dreft, or Cheer for you laundry and P&G makes another sale!

With all these brand products, PG also has created a huge moat in production, distribution, and marketing.

The ball's in your court
Since many factors determine whether a stock is a buy or sell, it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Head over to CAPS today and share your thoughts about whether these stocks are ready to bounce higher.

Procter & Gamble and Unilever are Motley Fool Income Investor selections. Philip Morris International is a Motley Fool Global Gains selection. Sadia is a Motley Fool Hidden Gems pick. The Fool owns shares of Procter & Gamble. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Rich Duprey owns shares of Procter & Gamble but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.


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