Supposedly the US economy is ready to tank and consumers aren’t spending at all. The keyword is “supposedly” though because certain Consumer Cyclical companies are posting strong top line numbers, regardless of the prevailing perception. There is no question that US consumers are agreeably weaker compared to pre-recession levels, but we don’t think they’re dead yet.
Relative to investors, if there was ever a time when they needed or wanted growth, now would be that time. For investors interested in growth companies with solid fundamental characteristics, this list provides a few names to review further.
Return on Assets (ROA) indicates the profitability of a company in relation to total assets. As well, ROA gives a picture of how well management is utilizing firm assets to generate earnings. This financial metric should generally be compared to the industry average and also compared against the companies ROA trend over time.
We screened specifically for Consumer Cyclical companies that had strong top line growth (1-Year Revenue Growth>20%). From this narrowed pool we screened for companies that also had sound fundamentals (ROA>15%).
The list is ranked from highest to lowest 1-Year Revenue Growth.
1. Lululemon Athletica, Inc. (NYSE: LULU)
Sector | Consumer Cyclical |
Industry | Apparel Stores |
Market Cap | $ 6,287M |
Beta | 2.43 |
Analyst Sentiment | 12/22 -List Hold/Neutral (Neutral) |
The company designs and sells athletic apparel. The firm’s 1-Year Revenue Growth is 57.14%. LULU’s Return on Assets is 24.40%. The short interest is 16.90% as of 07/29/2011. Given the short interest, this could be a short favorite or potentially a great short squeeze.
2. Imax Corporation (NYSE: IMAX)
Sector | Media – Diversified |
Industry | Consumer Cyclical |
Market Cap | $ 1,123M |
Beta | 2.10 |
Analyst Sentiment | 12/18 -List Buy/Outperform (Bullish) |
The company develops, leases, and sells digital and film based on motion picture technologies. The firm’s 1-Year Revenue Growth is 45.21%. IMAX’a Return on Assets is 28.87%. The short interest is 13.10% as of 07/29/2011. Given the short interest, this could be a short favorite or potentially a great short squeeze.
3. Tempur-Pedic International, Inc (NYSE: TPX)
Sector | Consumer Cyclical |
Industry | Home Furnishings & Fixtures |
Market Cap | $ 3,925M |
Beta | 1.77 |
Analyst Sentiment | 8/13 -List Buy/ Outperform (Bullish) |
The company manufactures and sells premium mattresses and pillows worldwide. The firm’s 1-Year Revenue Growth is 33.00%. TPX’s Return on Assets is 21.95%. The short interest is 7.40% as of 07/29/2011.
4. Priceline.com, Inc. (NASDAQ: PCLN)
Sector | Consumer Cyclical |
Industry | Leisure |
Market Cap | $ 25,040M |
Beta | 1.14 |
Analyst Sentiment | 14/19 – List Buy/Outperform (Bullish) |
The company is the operator of priceline.com, which is a popular travel booking website. The firm’s 1-Year Revenue Growth is 31.93%. PCLN’s Return on Assets is 18.15%. The short interest is 6.40% as of 07/29/2011.
5. Netflix, Inc. (NYSE: NFLX)
Sector | Consumer Cyclical |
Industry | Specialty Retail |
Market Cap | $ 12,819M |
Beta | 0.33 |
Analyst Sentiment | 12/31 – List Buy/Outperform (Slightly Bullish) |
The company offers a library of movies and TV shows via mail and the internet. The firm’s 1-Year Revenue Growth is 29.48%. NFLX’s Return on Assets is 16.38%. The short interest is 18.10% as of 07/29/2011. Given the short interest, this could be a short favorite or potentially a great short squeeze.
6. Dolby Laboratories, Inc. (NYSE: DLB)
Sector | Consumer Cyclical |
Industry | Media - Diversified |
Market Cap | $ 3,598M |
Beta | 0.81 |
Analyst Sentiment | 9/14 – List Hold/ Neutral (Neutral) |
The company develops and sells products and technologies related to the entertainment space. The firm’s 1-Year Revenue Growth is 28.24%. DLB’s Return on Assets is 16.56%. The short interest is 7.10% as of 07/29/2011.
7. Vera Bradley, Inc. (NASDAQ: VRA)
Sector | Consumer Cyclical |
Industry | Footwear & Accessories |
Market Cap | $ 1,254M |
Beta | 0.85 |
Analyst Sentiment | 4/5 -List Buy/Outperform (Bullish) |
The company designs and sells accessories for women. The firm’s 1-Year Revenue Growth is 26.69%. VRA’s Return on Assets is 22.42%. The short interest is 40.90% as of 07/29/2011. Given the short interest, this could be a short favorite or potentially a great short squeeze.
8. Gildan Activewear, Inc. (NYSE: GIL)
Sector | Consumer Cyclical |
Industry | Apparel Manufacturing |
Market Cap | $ 3,338M |
Beta | 1.44 |
Analyst Sentiment | 10/18-List Buy/Outperform (Bullish) |
The Company is a vertically-integrated manufacturer & marketer of branded basic apparel. The firm’s 1-Year Revenue Growth is 26.31%. GIL’s Return on Assets is 16.70%. The short interest is N/A.
9. Brookfield Asset Management Inc (NYSE: BAM)
Sector | Real Estate |
Industry | Real Estate - General |
Market Cap | $ 18,540M |
Beta | 1.45 |
Analyst Sentiment | 9/10 – List Buy / Outperform (Bullish) |
The company is an asset management firm that focuses on power, infrastructure, and property assets. The firm’s 1-Year Revenue Growth is 26.31%. BAM’s Return on Assets is 15.01%. The short interest is N/A as of 07/29/2011.
10. Chipotle Mexican Grill, Inc. (NYSE: CMG)
Sector | Consumer Cyclical |
Industry | Restaurants |
Market Cap | $ 9,959M |
Beta | 0.85 |
Analyst Sentiment | 16/25 – List Hold / Neutral (Neutral) |
The company is a fast-casual restaurant chain of fresh Mexican food. The firm’s 1-Year Revenue Growth is 20.91%. CMG’s Return on Assets is 15.96%. The short interest is 15.70% as of 07/29/2011. Given the short interest this could be a short favorite or potentially a great short squeeze.
We hope this list helps investors as they do their own due diligence on Consumer Cyclical stocks that are posting strong top line growth and solid fundamentals.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
