8 Outperforming Consumer Goods Stocks Being Bought By Hedge Funds

Feb. 14, 2013 3:03 PM ETAMWD, GMCR, NAV, SEE, TSLA, TWI, VC, WHR1 Comment
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Do you think there is enough positive sentiment in the U.S. economy to promote consumer spending? If so, are you looking to invest in consumer goods stocks? We created a list of stocks, which might be of interest to you.

We began by screening the consumer goods sector for stocks that have outperformed the market over the last quarter, with quarterly performance above 10%.

To see if they might have more upside we reviewed the 13F's of those companies in search of bullish sentiment from institutional investors, with significant net institutional purchases over the last quarter representing at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these names to outperform into the future.

A Closer Look

We looked at American Woodmark Corp. (AMWD) in more detail. The stock trades around $31.72 versus its 52-week range of $13.19-$32.50, up 122% in the past 1-year. Part of the stellar performance can be contributed to the improvement in the housing market. Others in its peer group such as Elkay Manufacturing Company, and MasterBrand Cabinets are privately held. American Woodmark also competes with Masco Corporation, but we don't think it's a fair comparison given the difference in the market caps of both companies.

As mentioned above, American Woodmark is up 122% in the past 1-year, which is a stellar performance compared to the Dow Jones Consumer Goods Sector Index (IYK), which is up 16% in the past 1-year.

The company has continued to experience double-digit sales growth, led by new construction sales growth close to 40%. Also, American Woodmark generated free cash flow of $2.4 million in the second quarter of 2013 versus $1.1 million in the second quarter of 2012. This is impressive for a small cap company such as American Woodmark, which has continued to grow within

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