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 a difficult housing sector.
The company is expected to report earnings on February 19th, 2013. As of October 31st, 2012, the company has $63 million in cash and cash equivalents, and long-term debt of a mere $24 million, which is primarily in the form of a draw down from its credit facility. The Company was in compliance with all covenants specified in the credit facility as of October 31, 2012.
Total contractual obligations of the company are available in the table below:
Is this an investment to make in an improving housing market?
For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.
Do you think these names will continue to outperform? Use this list as a starting point for your own analysis.
1. American Woodmark Corp. : Engages in the manufacture and distribution of kitchen cabinets and vanities for the remodeling and new home construction markets in the United States.
2. Green Mountain Coffee Roasters Inc. (GMCR): Engages in the specialty coffee and coffee maker business.
3. Navistar International Corporation (NAV): Manufactures and sells commercial and military trucks, buses, diesel engines, recreational vehicles (RVs), and chassis, as well as provides service parts for trucks and trailers.
4. Sealed Air Corporation (SEE): Manufactures and sells packaging and performance-based materials and equipment systems worldwide.
5. Tesla Motors, Inc. (TSLA): Designs, develops, manufactures, and sells electric vehicles and advanced electric vehicle powertrain components.
6. Titan International Inc. (TWI): Manufactures wheels, tires, and assemblies for off-highway vehicles used in the agricultural, earthmoving/construction, and consumer markets in the United States.
7. Visteon Corp. (VC): Supplies automotive systems, modules, and components to automotive original equipment manufacturers worldwide.
8. Whirlpool Corp. (WHR): Engages in the manufacture and marketing of home appliances worldwide.
*Institutional data sourced from Fidelity, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: Business relationship disclosure: Kapitall is a team of analysts. This article was written by Sabina Bhatia, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.
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