5 Consumer Stocks to Study

Many investors have been feeling downright skittish about retail stocks, given growing concerns about shrinking consumer spending. Let's review how the earnings of several retail and consumer-goods companies fared this past week, and also check into how our Motley Fool CAPS community perceives these stocks.

Company Name	CAPS Rating (out of 5)	Change in Earnings Per Share	Revenue Change	Impact on Price
Volcom (Nasdaq: VLCM)	****	73%	58.5%	26%
True Religion (Nasdaq: TRLG)	***	106%	73.5%	4%
Peet's Coffee & Tea (Nasdaq: PEET)	**	50%	17%	0.33%
bebe Stores (Nasdaq: BEBE)	**	(36%)	4.7%	2%
Timberland (NYSE: TBL)	**	100%	1.2%	18%

Data from Yahoo! Finance; stock price data for Peet's and bebe were as of this writing.

Surf's up!
Motley Fool Hidden Gems pick Volcom is certainly notable, thanks to its skyrocketing stock price following an impressive earnings report. The stock had taken quite a beating in the past few months after it did a face plant last October. (I'm glad I nominated it as a Black Friday Bargain Stock in November.)

Our CAPS community thinks the surf's up for Volcom, too, giving the extreme-sports clothier a four-star rating out of a possible five. In February, CAPS player Budsworth provided an eloquent bullish pitch on Volcom:

This company's financial history and current statements have are an example of brilliant forward thinking, while protecting working capital. They've managed their debts with brilliance. Their recent purchase of Electric Visual promises to be a solid asset and will easily pay for itself in short order. Then generate handsome profits.

Of course, that's not to say everybody's all about Volcom. In CAPS, of more than 2,000 players that have rated Volcom, only 100 disagree. Of those, player scottskiblack had this to say about Volcom: "Can't hold up to the competition."  

True Religion, with its three-star caps rating, also showed off an impressive quarter. One CAPS bull, Shaun2472, put it this way in November:

They basically 'print money,' as mentioned in their 2nd quarter 2007 conference call. As they grow into a lifestyle brand, the fear of the denim fad waning becomes less and less worrisome, but even then its jeans remain among the most popular. True Religion's customer base won't be as affected by an increase in gas prices or the mortgage fallout, because they're already paying $300 for a pair of jeans. Strong balance sheet, and a good growth story.

Still struggling, or ready to take off?
CAPS' two-star stocks may not sound that compelling, unless you really disagree with the crowd. (If you're right, of course, you can reap considerable profits.) Of the stocks noted in the table above, though, Motley Fool Stock Advisor recommendation bebe seems like the biggest disappointment.

The once-fashionable chain is now struggling to turn itself around, and judging by its 36% decrease in first-quarter profits, it seems there's still work to do. Consumers' ever-tightening purse strings hardly help matters. I'm sad to say that I've lost confidence in bebe in recent months.

CAPS player NeroSagetrade seems to agree. Check out this bearish pitch from December:

Bebe Stores look to be in a bad niche right now with fashion trends which arent finding the hot spot in an already softer economy. I fully expect same store sales figures to continue to be weak and for Bebe's market position to weaken further. From a technical perspective it wouldn't take but a sneeze of bad news to send this descending triangle off a vertical cliff. I'd be looking for a revenue and EPS warning shortly after the new year with another 'Christmas didn't live up to expectations' excuse out of the board. BEBE should be trading in the low $8s by 2008.

Of course, it wouldn't be CAPS if everyone agreed. Some players think fears of consumer malaise are overblown. jsIRA's entered in a bullish pitch just yesterday, noting, "Mall retailer is not as bad as people believed."

Window-shopping with CAPS
CAPS is a great source of investing ideas, and it's nice to get an idea of community sentiment by taking a look at the data we've received from over 100,000 participants. It's also a nice place to test out your own investing theses on certain companies.

Given the macroeconomic environment at this time, it stands to reason there will be some winners and some losers in the retail space. As long as you shop carefully and pay attention to price, there are ample opportunities to get quality retail stocks at good prices.