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5 Consumer Staples Stocks with Strong Growth Prospects
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Backed by an improving economy, the consumer staples sector has been performing really well among most product categories over the past few months. Further, lower gas prices and increasing consumer confidence are doing the trick for the stocks in this space.
Consumer Confidence Surges
Consumer confidence – a key determinant of the economy’s health – surged during the month of August, indicating that the economy is on the recovery path after a dismal show during the first half of the year. Cheaper gasoline prices and a strong labor market helped increase household wealth, which eventually boosted consumer spending.
In August, consumer confidence surged to its highest level in 11 months. The consumer confidence index increased 4.4 points to 101.1, well above the expected level of 97.4.Additionally, the expectations index increased to 86.4, but remained below the highest level achieved since the end of the 2008 recession.
Buildup of Bullish Data
Fed Vice Chairman Stanley Fisher is also optimistic about the state of the economy. Fisher said that the labor market was extremely close to full employment levels. Housing data released in August was also encouraging owing to favorable durable goods and industrial production. The only disappointment was the Department of Commerce’s second estimate for second-quarter GDP. Though GDP growth of 1.1% in the second quarter improved from first-quarter’s 0.8% growth, it was down a tenth of a percent from the initial reading.
Despite sluggish GDP, household consumption increased on an annualized basis of 4.4%, higher than the rate of 4.2% estimated earlier.
Hence, there is enough evidence that the economic picture may rebound in the third quarter, owing to improved residential construction and strong labor market conditions.
The Winning Strategy
Investing in the consumer staples stocks is safe because of their defensive nature. Surging consumer confidence is another indicator that the economy is poised to grow stronger in the second half of the year. In fact, consumer staple stocks have the potential to face headwinds from Brexit aftershocks, the Federal Reserve’s still pending decision over the rate hike, currency headwinds and other global growth issues.
That is why it may be a good idea to pick consumer-related stocks at this point. However, picking winning stocks may prove to be difficult.
With the help of our new style score system, we have shortlisted five stocks that have excellent prospects and hold immense growth potential. Our Growth Style Score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. Our research shows that stocks with Growth Style Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best investment opportunities in the growth investing space.
All the stocks selected herein flaunt a Zacks Rank #1 or 2, with a Growth Style Score of ‘A’ and certainly have bright prospects to ride out the impending volatility.
We recommend investing in packaged food company, Sysco. This Houston, TX-based packaged food company has delivered an average positive surprise of 8.32% in the trailing four quarters. It is expected to witness earnings growth of 10.24% in fiscal 2017 and 12.40% in fiscal 2018.
Sysco’s sales have improved consistently, driven by acquisitions and volume growth. The company’s efforts to boost sales and margins are bearing fruit, as it delivered positive gross margins in the last five consecutive quarters, after persistent declines in the last two fiscal years.
This Zacks Rank #2 stock has a long-term earnings growth rate of 8.60%, beta of 0.56 and a Growth Score of ‘A’.
Springdale, AR-based Tyson Foods is the world's largest fully-integrated producer, processor and marketer of chicken and poultry-based food products. The company offers a wide array of meat products and enhances its portfolio through innovation and acquisitions. Its sales-boosting initiatives and strong international presence are also appealing.
The company has delivered an average positive earnings surprise of 12.24% in three out of the trailing four quarters. It is expected to witness earnings growth of 43.33% in fiscal 2016 and 6.76% in fiscal 2017.
With a Growth Score of ‘A’, beta of 0.26, long-term earnings growth rate of 11% and an attractive Zacks Rank #2, this stock is a hot pick for investors.
Winston-Salem, NC-based Primo Water Corporation operates as a provider of three- and five-gallon purified bottled water and water dispensers sold through major retailers nationwide. It holds a Zacks Rank #2 and a Growth Score of ‘A’.
The company has delivered an average positive surprise of 270.00% over the past four straight quarters. It has a beta of 0.32 and a long-term EPS growth rate of 10%.
Currently, Primo Water is believed to be one of the better long-term growth investments in the market, as the water market is booming. Consumers have been substituting sugary drinks for less-sugary, healthier alternatives like water.
Nu Skin Enterprises is engaged in the development and distribution of consumer products, offering beauty and wellness solutions under its Nu Skin personal care, Pharmanex nutrition brand and ageLOC anti-aging category brands in over 50 markets worldwide. The Provo, UT-based firm sports a Zacks Rank #1 and has a Growth Score of ‘A’.
The company’s operating results have shown improvement in the near term, primarily due to innovation. Further, this skin care and nutritional products retailer raised its outlook for 2016 owing to new product launches and a favorable view on currency.
The company is expected to witness earnings growth of 2.22% in 2016 and 13.75% in 2017, and targets a long-term EPS growth rate of 6.16%.
Based in Pembroke Pines, FL, Elizabeth Arden carries a Zacks Rank #2 and a Growth Score of ‘A’. It manufactures and sells beauty products in the U.S. and internationally.
The company has delivered an average positive surprise in the last two consecutive quarters. It is expected to witness earnings growth of 52.40% in fiscal 2017 and 116.81% in fiscal 2018.
Intelligently selecting stocks for investments greatly benefits investors. The abovementioned stocks can prove to be valuable additions to your portfolio.
You can also use the Zacks Stock Screener to find other stocks with this winning combination. Your search ends at stocks with a favorable Zacks Rank of either #1 or #2, which encompasses its strong fundamentals, promises price movement and highlights analysts’ constructive view on the same via positive estimate revisions. As we know, a sturdy portfolio always gives favorable returns.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>
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5 Consumer Staples Stocks with Strong Growth Prospects
Backed by an improving economy, the consumer staples sector has been performing really well among most product categories over the past few months. Further, lower gas prices and increasing consumer confidence are doing the trick for the stocks in this space.
Consumer Confidence Surges
Consumer confidence – a key determinant of the economy’s health – surged during the month of August, indicating that the economy is on the recovery path after a dismal show during the first half of the year. Cheaper gasoline prices and a strong labor market helped increase household wealth, which eventually boosted consumer spending.
In August, consumer confidence surged to its highest level in 11 months. The consumer confidence index increased 4.4 points to 101.1, well above the expected level of 97.4.Additionally, the expectations index increased to 86.4, but remained below the highest level achieved since the end of the 2008 recession.
Buildup of Bullish Data
Fed Vice Chairman Stanley Fisher is also optimistic about the state of the economy. Fisher said that the labor market was extremely close to full employment levels. Housing data released in August was also encouraging owing to favorable durable goods and industrial production. The only disappointment was the Department of Commerce’s second estimate for second-quarter GDP. Though GDP growth of 1.1% in the second quarter improved from first-quarter’s 0.8% growth, it was down a tenth of a percent from the initial reading.
Despite sluggish GDP, household consumption increased on an annualized basis of 4.4%, higher than the rate of 4.2% estimated earlier.
Hence, there is enough evidence that the economic picture may rebound in the third quarter, owing to improved residential construction and strong labor market conditions.
The Winning Strategy
Investing in the consumer staples stocks is safe because of their defensive nature. Surging consumer confidence is another indicator that the economy is poised to grow stronger in the second half of the year. In fact, consumer staple stocks have the potential to face headwinds from Brexit aftershocks, the Federal Reserve’s still pending decision over the rate hike, currency headwinds and other global growth issues.
That is why it may be a good idea to pick consumer-related stocks at this point. However, picking winning stocks may prove to be difficult.
With the help of our new style score system, we have shortlisted five stocks that have excellent prospects and hold immense growth potential. Our Growth Style Score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. Our research shows that stocks with Growth Style Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best investment opportunities in the growth investing space.
All the stocks selected herein flaunt a Zacks Rank #1 or 2, with a Growth Style Score of ‘A’ and certainly have bright prospects to ride out the impending volatility.
5 Prominent Picks
Sysco Corporation (SYY - Free Report)
We recommend investing in packaged food company, Sysco. This Houston, TX-based packaged food company has delivered an average positive surprise of 8.32% in the trailing four quarters. It is expected to witness earnings growth of 10.24% in fiscal 2017 and 12.40% in fiscal 2018.
Sysco’s sales have improved consistently, driven by acquisitions and volume growth. The company’s efforts to boost sales and margins are bearing fruit, as it delivered positive gross margins in the last five consecutive quarters, after persistent declines in the last two fiscal years.
This Zacks Rank #2 stock has a long-term earnings growth rate of 8.60%, beta of 0.56 and a Growth Score of ‘A’.
SYSCO CORP Price, Consensus and EPS Surprise
SYSCO CORP Price, Consensus and EPS Surprise | SYSCO CORP Quote
Tyson Foods, Inc. (TSN - Free Report)
Springdale, AR-based Tyson Foods is the world's largest fully-integrated producer, processor and marketer of chicken and poultry-based food products. The company offers a wide array of meat products and enhances its portfolio through innovation and acquisitions. Its sales-boosting initiatives and strong international presence are also appealing.
The company has delivered an average positive earnings surprise of 12.24% in three out of the trailing four quarters. It is expected to witness earnings growth of 43.33% in fiscal 2016 and 6.76% in fiscal 2017.
With a Growth Score of ‘A’, beta of 0.26, long-term earnings growth rate of 11% and an attractive Zacks Rank #2, this stock is a hot pick for investors.
TYSON FOODS A Price, Consensus and EPS Surprise
TYSON FOODS A Price, Consensus and EPS Surprise | TYSON FOODS A Quote
Primo Water Corporation (PRMW - Free Report)
Winston-Salem, NC-based Primo Water Corporation operates as a provider of three- and five-gallon purified bottled water and water dispensers sold through major retailers nationwide. It holds a Zacks Rank #2 and a Growth Score of ‘A’.
The company has delivered an average positive surprise of 270.00% over the past four straight quarters. It has a beta of 0.32 and a long-term EPS growth rate of 10%.
Currently, Primo Water is believed to be one of the better long-term growth investments in the market, as the water market is booming. Consumers have been substituting sugary drinks for less-sugary, healthier alternatives like water.
PRIMO WATER CP Price, Consensus and EPS Surprise
PRIMO WATER CP Price, Consensus and EPS Surprise | PRIMO WATER CP Quote
Nu Skin Enterprises, Inc. (NUS - Free Report)
Nu Skin Enterprises is engaged in the development and distribution of consumer products, offering beauty and wellness solutions under its Nu Skin personal care, Pharmanex nutrition brand and ageLOC anti-aging category brands in over 50 markets worldwide. The Provo, UT-based firm sports a Zacks Rank #1 and has a Growth Score of ‘A’.
The company’s operating results have shown improvement in the near term, primarily due to innovation. Further, this skin care and nutritional products retailer raised its outlook for 2016 owing to new product launches and a favorable view on currency.
The company is expected to witness earnings growth of 2.22% in 2016 and 13.75% in 2017, and targets a long-term EPS growth rate of 6.16%.
NU SKIN ENTERP Price, Consensus and EPS Surprise
NU SKIN ENTERP Price, Consensus and EPS Surprise | NU SKIN ENTERP Quote
Elizabeth Arden, Inc.
Based in Pembroke Pines, FL, Elizabeth Arden carries a Zacks Rank #2 and a Growth Score of ‘A’. It manufactures and sells beauty products in the U.S. and internationally.
The company has delivered an average positive surprise in the last two consecutive quarters. It is expected to witness earnings growth of 52.40% in fiscal 2017 and 116.81% in fiscal 2018.
ELIZABETH ARDEN Price, Consensus and EPS Surprise
ELIZABETH ARDEN Price, Consensus and EPS Surprise | ELIZABETH ARDEN Quote
Bottom Line
Intelligently selecting stocks for investments greatly benefits investors. The abovementioned stocks can prove to be valuable additions to your portfolio.
You can also use the Zacks Stock Screener to find other stocks with this winning combination. Your search ends at stocks with a favorable Zacks Rank of either #1 or #2, which encompasses its strong fundamentals, promises price movement and highlights analysts’ constructive view on the same via positive estimate revisions. As we know, a sturdy portfolio always gives favorable returns.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>