From an uptick in corporate IT spending to a rise in merger activity, pockets of the economy are definitely showing signs of life. But the U.S. personal savings rate remains elevated, and actual job growth is a distant dream. Consumer-dependent industries could struggle for some time yet yet, notwithstanding some excellent performances from McDonald's
A recent U.S. News & World Report article highlighted less obvious 10 consumer-goods names that have grown revenue and gained market share since the recession started in December 2007. However the broad economy may move, the odds favor these companies' continued outperformance -- good news for management and investors alike.
In the table below, I've listed six of those companies. Interestingly, whether they're widely recognized or relatively unknown, their modest size makes yet another argument for sticking with small- and mid-cap stocks to boost your returns.
Company |
Market Cap |
Product Categories |
2007 Sales Growth |
2008 Sales Growth |
TTM Sales Growth |
---|---|---|---|---|---|
Green Mountain Coffee Roasters |
$3.2 billion |
Specialty coffee and brewing systems |
51.6% |
46.4% |
56.1% |
Hansen Natural |
$3.4 billion |
Nonalcoholic specialty beverages |
49.3% |
14.3% |
9.7% |
TreeHouse Foods |
$1.1 billion |
Packaged foods and sauces |
23.3% |
29.6% |
9.5% |
Jarden |
$2.4 billion |
Home, recreation, and outdoor |
21.2% |
15.5% |
(2.8%) |
Hasbro |
$3.9 billion |
Toys and games |
21.8% |
4.8% |
(4.0%) |
Tupperware Brands |
$2.9 billion |
Food storage, beauty, and personal care |
13.6% |
9.1% |
(8.7%) |
Data from Yahoo! Finance and Capital IQ as of Oct. 26. TTM = trailing 12 months.
Green Mountain Coffee Roasters and Hansen Natural win credit as the innovators of the group, but I'm more intrigued by boring old companies whose results have been anything but dull. First on that list: Tupperware Brands.
Well-preserved profits
A staple of U.S. kitchens since 1946, iconic Tupperware food containers are now part of a fully global company that includes a growing line of beauty and personal-care products. How global? In 2008, emerging-markets sales composed more than half the company's revenue, and non-U.S. operations in total contributed more than 80% of net sales. That geographic profile yields sour financial results when the dollar is unusually strong against foreign currencies, as it was earlier in the year. But in the longer term, Tupperware Brands' international footprint will likely be the envy of more U.S.-centric competitors.
Most recently, the company served up plenty of upside surprise in its third-quarter results. Revenue and earnings per share came in higher than previous guidance, and management announced a 14% dividend increase, along with a more aggressive full-year forecast. When consumers can mosey into the nearest division of Wal-Mart Stores'
All said, Tupperware Brands could help keep your portfolio mighty fresh for the next several quarters.
Lighting the way?
Home to classic consumer brands such as Ball, Bicycle, Crock-Pot, and Coleman, Jarden is the latest incarnation of a 1993 spinoff from Ball. A new management team took over in 2002 to what seems to be good effect: Adjusted EPS grew at an annualized 16.4% in the 2004-2008 period, while free cash flow yield climbed from a paltry 4.7% to an impressive 19.1%.
According to the U.S. News & World Report article, applications for fishing and camping permits have risen roughly 10% in the past year -- a sure sign of "trade-down" vacations. That's good news for the company's Coleman product line, which includes the multigenerational favorite Coleman lantern in addition to tents, coolers, waders, and other outdoor gear.
But investors need to give this name a close look: Jarden's long-term debt-to-equity ratio stands at 1.47, and management's taken on the arguably unwieldy task of juggling 100 different brands. Still, if all goes well, Jarden has the potential to light the way for both value-focused consumers and investors alike.
Winners and losers
Ultimately, selecting consumer-focused companies based on past performance is an imperfect strategy. Moreover, if I'm wrong about consumers remaining tight-fisted in the years to come, the list of winning companies could look quite different.
What do you think about the fate of consumer spending? Have I missed companies that are poised to thrive? Let me know in the comments section below.