If you prefer to invest in what you know, chances are consumer stocks are part of your portfolio. When you like a product and choose to invest in it, you often feel a deeper connection to the company. But liking a product doesn't always equate to a good investment. A company has to have strong management and operations. Today, we focused on consumer stocks that are pulling in great profits, and we further reduced the list to include those that have "Buy" or better ratings from analysts. These two traits, impressive profits and analyst backing, point to a company worthy of a deeper analysis. The list below is a great place to start your research process.
The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue
Return on Assets (ROA) illustrates how much a company is generating in earnings from its assets alone. This metric gives investors a picture of how profitable the company is relative to the assets in current possession. As well, it lets investors see how efficient and effective management is at generating earnings from the company's assets. While most management teams can probably make money by throwing money at an issue, very few can make very large profits with little investment.
We first looked for consumer stocks. We next screened for businesses that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We then screened for businesses with strong profitability (Net Margin [TTM] >10%)(ROA > 10%). We did not screen out any market caps.
Do you think these stocks have strong enough fundamentals to move higher? Use our screened list as a starting point for your own analysis.
1) The Coca-Cola Company (KO)
|Industry||Beverages - Soft Drinks|
|Return on Assets||10.63%|
The Coca-Cola Company, a beverage company, engages in the manufacture, marketing, and sale of nonalcoholic beverages worldwide. The company primarily offers sparkling beverages and still beverages. Its sparkling beverages include nonalcoholic ready-to-drink beverages with carbonation, such as carbonated energy drinks, and carbonated waters and flavored waters. The company's still beverages comprise nonalcoholic beverages without carbonation, such as noncarbonated waters, flavored waters and enhanced waters, noncarbonated energy drinks, juices and juice drinks, ready-to-drink teas and coffees, and sports drinks. It also provides flavoring ingredients, sweeteners, powders for purified water products, beverage ingredients, and fountain syrups. The Coca-Cola Company sells its products primarily under the Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia, and Del Valle brand names. The company offers its beverage products through company-owned or controlled bottling and distribution operators, as well as through independently owned bottling partners, distributors, wholesalers, and retailers. The Coca-Cola Company was founded in 1886 and is headquartered in Atlanta, Georgia.
2) Mead Johnson Nutrition Company (MJN)
|Industry||Processed & Packaged Goods|
|Return on Assets||21.00%|
Mead Johnson Nutrition Company manufactures, distributes, and sells infant formulas, children's nutritional products, and other nutritional products in Asia, Europe, Latin America, and North America. Its infant formula products include formulas for routine feeding; solutions formulas for mild intolerance and specialty formula products, including formulas for severe intolerance; formulas for premature and low birth weight infants; and medical nutrition products. The company also offers products for infants with milk protein allergy, gas/fussiness, lactose intolerance, anti-regurgitation, severe protein sensitivity, multiple food allergies, fat malabsorption, and premature infants, as well as soy formula. Its children's nutrition products comprise nutritious powdered milk for picky eaters, nutritious powdered milk, and nutritious milk modifier. The company also offers a range of other products, including pre-natal and post-natal nutritional supplements for expectant and nursing mothers. Mead Johnson Nutrition Company markets its products under the Enfamil, Enfalac, Enfapro, Nutramigen, Pregestimil, Enfacare, Enfagrow, EnfaSchool, Enfakid, Sustagen KID, Lactum, Alacta, ChocoMilk, Cal-C-Tose, Expecta LIPIL, and EnfaMama names. It sells its products to retail channels, including mass merchandisers, club stores, grocery stores, drug stores, and convenience stores. The company was founded in 1905 and is headquartered in Glenview, Illinois. Mead Johnson Nutrition Company, formerly a subsidiary of Bristol-Myers Squibb Co., completed its initial public offering in February 2009.
3) Hershey Co. (HSY)
|Return on Assets||14.99%|
The Hershey Company, together with its subsidiaries, engages in manufacturing, marketing, selling, and distributing various chocolate and confectionery products, pantry items, and gum and mint refreshment products worldwide. It offers chocolate and sugar confectionery products, including milk chocolate bars, chocolates, candies, candy bars, wafer bars, peanut butter cups, peanut caramel bars, boxed chocolates, malted milk balls, peppermint pattie, and toffee bars. The company also provides high-cacao dark chocolate products, such as chocolate bars, tasting squares, and home baking products; and natural and organic chocolate products consisting of chocolate bars, drinking chocolate, and baking products. In addition, it offers snack products comprising snack bars and macadamia snack nuts; and a line of refreshment products, such as mints, chewing gum, and bubble gum, as well as pantry items consisting of baking products, toppings, sundae syrups, and hot cocoa mix. Further, the company provides chocolate-covered raisins, peanuts, and almonds; beverage products; and cooking oil products. It sells its products through sales representatives and food brokers, primarily to wholesale distributors, chain grocery stores, mass merchandisers, chain drug stores, vending companies, wholesale clubs, convenience stores, dollar stores, concessionaires, and department stores. The company was founded in 1894 and is headquartered in Hershey, Pennsylvania.
4) Deckers Outdoor Corp. (DECK)
|Industry||Textile - Apparel Footwear & Accessories|
|Return on Assets||19.50%|
Deckers Outdoor Corporation engages in the design, manufacture, and marketing of footwear and accessories for outdoor activities and casual lifestyle use for men, women, and children. The company offers luxury footwear, handbags, apparel, and cold weather accessories under the UGG brand name; open and closed-toe outdoor lifestyle footwear, multi-sport shoes, light hiking shoes, amphibious footwear, and rugged outdoor travel shoes under the Teva brand name; action sport footwear under the Sanuk brand name; high-end casual footwear for men and women under the TSUBO brand name; outdoor performance and lifestyle footwear under the Ahnu brand name; and work footwear under the MOZO brand name. The company sells its products primarily to specialty retailers, department stores, outdoor retailers, sporting goods retailers, shoe stores, and online retailers. Deckers Outdoor Corporation also sells its products directly to end-user consumers through its websites, call centers, retail concept stores, and retail outlet stores, as well as through retailers in the United States. In addition, the company distributes its products through independent distributors and retailers in Europe, Canada, Australia, Asia, and Latin America. It has a joint venture with Stella International Holdings Limited for the opening of retail stores and wholesale distribution for the UGG brand in China. Deckers Outdoor Corporation was founded in 1973 and is headquartered in Goleta, California.
5) Le Gaga Holdings Ltd (GAGA)
|Return on Assets||10.95%|
Le Gaga Holdings Limited engages in cultivating, processing, and distributing vegetables, fruits, and tea leaves in the People's Republic of China and Hong Kong. The company is also involved in cultivating and selling fir trees. It offers solanaceous vegetables, including sweet peppers, tomatoes, eggplants, pumpkins, and cucumbers; leafy vegetables comprising flowering Chinese cabbage, baby bok choy, and baby Chinese cabbage; and cruciferous vegetables, such as broccoli and Chinese cabbage. As of March 31, 2012, the company operated 11 farms with an aggregate area of 1,671 hectares in Fujian, Guangdong, and Hebei provinces. It sells approximately 50 varieties of vegetables, primarily to wholesalers, institutional customers, and supermarket chains. The company was founded in 2004 and is based in Kowloon, Hong Kong.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/30/2012.