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 more than 300 stocks listed under consumer goods in the CAPS' screener, we've unearthed a few that have earned the community's maximum five-star rating. Those accolades signal our 140,000 CAPS members' confidence that these stocks will beat the market in the months ahead. Let's see what members are saying about the five below:
|
Company
|
CAPS Rating Today
(out of 5)
|
Recent Price
|
52-Week
Price Change
|
Est. 5-Year
Growth Rate
|
|
Agria (NYSE: GRO )
|
*****
|
$2.06
|
(39%)
|
10%
|
|
Cosan (NYSE: CZZ )
|
*****
|
$8.23
|
1%
|
N/A
|
|
Philip Morris International (NYSE: PM )
|
*****
|
$48.93
|
(4%)
|
10%
|
|
Procter & Gamble (NYSE: PG )
|
*****
|
$57.24
|
(17%)
|
10%
|
|
Spartan Motors (Nasdaq: SPAR )
|
*****
|
$5.59
|
52%
|
18%
|
Source: Motley Fool CAPS; Yahoo! Finance, as of Sept. 22.
While some companies in the consumer goods sector have obviously fared better than others -- Spartan Motors is up 52%, after all, and Fuqi International is up more than 250% -- the average consumer products stock is up just 1.5% from the year-ago period. So let's take a closer look at why investors might think that some of these companies won't be jumping from the frying pan into the fire.
Some spring in its step
One of the biggest developments of the recession (ignoring the financial system collapse, of course, and the massive government intervention) was the continual rise of private-label goods in popularity and accessibility across major retailers.
You know a private label when you see one -- the store-brand fabric softener prominently displayed right next to Procter & Gamble's Downy brand, but at a significantly discounted price. Or the Sam's Club soda right next to the Coca-Cola (NYSE: KO ) products, but selling at only pennies a can at the local Wal-Mart (NYSE: WMT ) . I recently suggested that Ralcorp might be a winning investment because it derives 17% of its revenue from being a private-label supplier to Wal-Mart, while also offering a well-recognized brand in its Post cereals.
Those private-label brands are part of the reason that Procter & Gamble had a hard time enjoying the market's rebound this year. Despite pushing through price increases last year, net sales remained relatively flat in the latest quarter, as unit volume fell in areas such as beauty and household products. Shares of P&G are up only 21% over the past six months, while the S&P 500 has surged nearly 30% in the same period.
But the power of brands might be returning. According to a Citigroup study, national food brands stole market share from private-label products for the first time since 2006. Over the four-week period ending Sept. 5, branded products gained 20 basis points of market share in dollars, compared to the same period last year. The shift ends a long, three-year stretch in which unbranded products reigned supreme.
Investors like CAPS member SIP09PSU haven't been much concerned about Procter & Gamble's lackluster performance thus far, because of the company's "superior ability to launch new products." FinanceGuy58 says "the king of all brand companies" is a marketing machine that will be able to snag market share once discretionary dollars become available:
I purchased it in the real world closer to $47 because I sensed value in the stock. As disposable income increases, people will tend to buy their favorite brands, instead of the store brand. PG has armies of marketers that know why we buy a particular item and how to craft that pitch directly to us. I also like the nice yield while I wait.
The ball's in your court
There are many factors that go into whether a stock is a buy or sell, so 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 with other investor-analysts on whether you think these stocks are ready to bound higher.
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