The Federal Reserve raised rates this month — far sooner than expected just three months ago — and durable goods orders are coming in consistently higher than expected. These are bullish signs for the U.S. economy. It means the consumer is reviving and since consumers drive about 70% of the American economy, it augurs good times for consumer stocks.
Now, this doesn’t mean people will be going out and buying houses, but it does mean people are more comfortable buying things that may be slightly more expensive or indulgent than they were in the past. Brand name clothes, cool household devices, a nicer bottle of wine.
What’s more, given some of the volatility in Washington, consumer stocks tend to be rock solid hedges against any uncertainty or increased volatility. When there’s a bullish long-term outlook, but a cloudy short-term view, consumer stocks are the pros’ choice.
Below are seven consumer stocks that will lead your portfolio through this year of the consumer.
Consumer Stocks to Buy: Nutrisystem (NTRI)
Nutrisystem Inc. (NASDAQ:NTRI) is a double threat moving into the spring. First, as warmer weather approaches, the first wave of New Year’s Eve resolutions is now bringing the second wave of bathing suit weather – for summer as well as spring break.
And maybe the Post It note on the fridge that said ‘No More Junk’ just hasn’t been working.
Well, now with a few extra dollars to spend, it’s a good time for consumers to look to NTRI and its weight management system. The system is built around ordering four weeks worth of meals that are built to feed you properly and sufficiently. This takes all the headache out of meal planning or going shopping when you need to.
It’s the biggest weight management company in the business and given NTRI’s 177% growth in the past 12 months, the business of slimming down customers is booming.
Consumer Stocks to Buy: Sodastream (SODA)
Sodastream International Ltd (NASDAQ:SODA) has made quite a comeback from its worst days in 2015. Back then, it was a almost left for dead by most analysts and investors.
Its product always has been home beverage carbonation systems. In the early days, it was a way to make carbonated sodas in a variety of flavors, using syrups and carbonated water, not unlike soda pop is made in commercial establishments or by manufacturers. But here you could also customize the carbonation, mix and match flavors, etc. It even had a line of home-made mixers for adult beverages.
But the problem was, it remained easier to buy pre-made sodas. And if you were a big soda consumer, exchanging CO2 bottles was not convenient. For SODA, the problem was its margins had nowhere to grow since the syrups were as cheap as they were going to get and SODA couldn’t out-price its in-store competition.
That all hit home in 2015. But SODA management rallied. It decided to rebrand and concentrate on making carbonated water systems. Now it makes a half dozen various types of systems, from individual bottles to larger containers. It still offers its syrups, but it is focusing on selling the machines rather than the flavors.
And it’s worked. Sales are rebounding and the stock is taking off. SODA is up 250% in the past 12 months. Granted that’s off last-rites lows, but the trend is rewarding solid performance.
Consumer Stocks to Buy: Vail Resorts (MTN)
Vail Resorts, Inc. (NYSE:MTN) is definitely the kind of place you can spend some of your extra hard earned dollars. Building off one of the most iconic names in mountain sports, MTN has built out its empire to include other world-class ski resorts in Colorado, Nevada and British Columbia.
It also has spun off a property management company to run not only the mountain sports and events, but the properties there and in other locations.
And the word Vail conjures luxury as few words do. That is what the brand is all about. That means its properties are also top destinations for major major winter conferences, as well as ski and snowboard competitions. Those are great for business as well as great free marketing and sponsorship opportunities.
MTN is up almost 50% in the past 12 months and it also delivers a solid 2.2% dividend yield. This trend is certainly your friend.
Consumer Stocks to Buy: Ferrari (RACE)
Ferrari NV (NYSE:RACE) is the publicly traded arm of the legendary ultra luxe carmaker. In FY2016 RACE made — and sold — about 8,000 cars. By comparison, Ford Motor Company (NYSE:F) sold 3 million cars in the U.S. alone last year. RACE makes collectible cars for the ages.
And of this year, it’s the 70th year it has been making cars this way.
This is the ultimate extension of the rebirth of the consumer. The 1% that make all their money from the other 99% will do very very well and these are the types of things that they spend their money on. And even RACE is looking forward to it. It is increasing production by almost 5% this year, anticipating growth across all its markets, especially China.
Add to this all the revenue from licensing the Ferrari brand and logo for clothes, jewelry, glasses, etc and you can expect RACE to take the checkered flag once again in 2017. The stock just hit 52-week highs and is up nearly 80% in the past 12 months.
Consumer Stocks to Buy: MakeMyTrip (MMYT)
MakeMyTrip Limited (NASDAQ:MMYT) is a homegrown Indian version of Priceline Group Inc (NASDAQ:PCLN). Granted, it’s not the size of its U.S. cousin, but it does have an expanding grip in a market where the middle class is growing rapidly, and travel is just as important as it is in other major Asian countries.
MMYT represents organic growth rather than the growth by acquisition that some of the bigger players like PCLN count on to grow earnings. With over 1 billion people and families spread across the world, MMYT is becoming the go-to site for online travel.
In October of last year, MMYT did buy rival Indian travel firm Ibibo. That came along with South African global internet firm Naspers Ltd (OTCMKTS:NPSNY) and Chinese online giant Tencent Holdings Ltd (OTCMKTS:TCTZF) as 40% stakeholders. That kind of partnership means MMYT is likely to become a global player in the very near future. And even if it just expands to China, it will have its brand in front of about half of the world’s population.
The stock is up almost 100% in the past 12 months and has significant headroom left.
Consumer Stocks to Buy: Bunge Ltd (BG)
Bunge Ltd (NYSE:BG) is massive agribusiness that has been around for nearly 200 years, yet it continues to suffer under some significant misunderstandings from many investors.
BG doesn’t farm. It processes, stores and delivers crops. For example, it doesn’t own wheat fields, it buys wheat and makes flour. It’s basically a middleman between farmers and wholesalers taking delivery of these products around the world.
While its headquartered in the U.S., a majority of its business is out of Brazil and Argentina. And as you may have noticed in the past couple years, neither economy has been doing well in large part because of crashing commodity prices.
But in April 2016, things started to improve and now, BG is back in business, growing earnings as successfully as it is selling products. In the past 12 months the stock is up more than 40% and it continues to throw off a respectable 2.2% dividend yield.
As economies recover, so will food prices — and profits.
Consumer Stocks to Buy: Altria (MO)
Altria Group Inc (NYSE:MO) usually draws fire as one of the most visible ‘sin’ stocks in the market. But the irony is that its U.S, tobacco business is usually valued at nothing for most analysts calculations.
Its growth comes from the vaping craze as well as its stable on wineries and its payoff after the SAB Miller and Anheuser Bush InBev NV (NYSE:BUD) merger. That little transaction netted MO about $5.3 billion, even more than it expected. And it still owns a 10% share of BUD. MO’s e-cigarette division Nu Mark now controls 55% of the vaping market and there is little sign this trend is slowing down. As smokers look for alternatives to quitting and new smokers are looking for a more socially acceptable vehicle, vaping has a big potential audience to draw upon.
Best of all, MO is the ultimate shareholder-friendly stock — it has raised its dividend, which now sits at 3.3%, 50 times in the past 47 years. And it’s seen some serious rough patches over this timeframe.
The stock is up 20% in the past 12 months but its Chateau Ste Michelle wine division as well as its BUD stake should see some bigger numbers as the economy recovers.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
