Despite concerns over decreased consumer spending, many consumer good stocks have pulled through.
Consumer goods, to name a few categories, include textiles (such as clothing, shoes, and accessories), auto parts, meat products, cigarettes, beverages, appliances, toys and more.
We then screened a universe of consumer good stocks with market caps over $300M for those that are also highly profitable, beating their industry peers on gross, operating, and pre-tax margins.
If you are not familiar with these terms, have no fear! We review them below.
We were left with 42 names, from which we further screened for the companies that are rallying above their 20, 50, and 200-day market averages (MA). We were left with 23 names.
We list the top 10 by market cap below. Companies with higher market cap are considered to have more trustworthy information because they have greater histories of profitability and data.
Rallying: When a stock is rallying it means it is performing above its market average for a given time period. It is presented as a % of performance relative to the average. When a stock is performing above its 20-day moving average (MA) as well as its 50- and 200-day market averages, it signals bullish momentum. All the stocks in this list are rallying above their 20, 50, and 200-day MA.
Trailing 12 months (TTM): An indication that the calculated data has come from the last 12 months. For example, if data released in July 2045 is ""TTM"" (ie, P/E TTM or ""Trailing P/E""), this means the price and the earning-per-share data comes from the twelve-month period of August 2044 to July 2045.
TTM Gross margin: This metric that tells us the percentage of a company's revenue is left after paying all production expenses. Costs include overhead, payroll and taxation. ((revenues-cost of goods sold) / Revenue ) *100 = Gross margin %
TTM Operating margin: This tells us the percentage remaining after all operating expenses are paid. Operating expenses include: supplies, repairs, research and development, and depreciation:
(Operating Income / Net Operating Revenue) *100 = Operating Margin %
TTM Pre-tax margin: A company's earnings before taxes. This incorporates all of the expenses associated with business excluding taxes. It can help to determine the overall operating efficiency of the firm. The higher the pre-tax margin, the more profitable the company:
(Net profit before taxes / net sales) *100 = Pre-tax Margin
Market capitalization (market cap): Market capitalization, commonly referred to as market cap, is the total market value of a company's outstanding shares. It can be thought of as a measure of company's size. It can be calculated by multiplying the number of shares by the current price of the shares.
Example, If company X has 15 million outstanding shares valued at $25 a share, the market cap would be $15M x $25 = $375M. If Company's X's stock price rises to $30 then the new market value will be $450 Million ($15M x $30 = $450M).
Now that you're armed with information, take a look at our profitable stocks below. Do you think their momentum will continue to benefit their market values? Use the list as a starting-off point for your own analysis.
List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)
2. Philip Morris International
3. Honda Motor Co.
6. Estee Lauder
8. HJ Heinz
10. J. M. Smucker
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Becca Lipman does not own any of the shares mentioned above.
The Motley Fool owns shares of Coca-Cola and Philip Morris International. Motley Fool newsletter services have recommended buying shares of Coca-Cola, Philip Morris International, Kellogg, and HJ Heinz. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.