Recent news on the U.S. economy has been very encouraging. And that means it’s time to take a look at a sector that hasn’t really been tearing up the track of late: consumer stocks.
Most of this year we’ve witnessed the transition to online shopping and the havoc that’s hitting brick-and-mortar businesses that thought they were too big to fail.
We’ve also seen that consumers have been less interested in committing to big ticket items, whether it’s to pay down their accumulated debt from before the crash; pay off student loans; or are simply unsure about the economy in relation to their job security.
But that tide is turning. GDP numbers are being revised, and people actually have more to spend than they have since the crash.
With that in mind, the following are seven A-rated consumer stocks that will strengthen your portfolio. These are the cream of the crop that are great choices as the U.S. consumer gets back to spending.
A-Rated Consumer Stocks to Buy: Johnson Outdoors Inc. (JOUT)
Johnson Outdoors Inc. (NASDAQ:JOUT) is all about the great outdoors. From boat motors to kayaks to scuba gear to camping equipment, JOUT owns some of the biggest brands in these sectors.
And this is the perfect spot to be, especially as consumers look to get out and about more. Its past two earnings reports have been very bullish, with double-digit growth across most of its sectors.
It’s evident that investors are taking notice — the stock is up 44% in the past 3 months.
Johnson Outdoors also plays well into the millennial demographic because as group, they tend to be more interested in experiences. For example, they would rather scuba dive a coral reef than sit on a beach at a 5-star resort, sipping daquiris by the pool bar.
The great outdoors is also getting a lot of converts from families looking to take a fun and affordable long weekend — without cell phone service.
A-Rated Consumer Stocks to Buy: NutriSystem Inc. (NTRI)
NutriSystem Inc. (NASDAQ:NTRI) has been on a roll this year, up 43% in 2017, and 80% in the past 12 months.
Weight loss has always been a niche industry and fairly cyclical. But NTRI has found the perfect blend of weight loss, nutrition and accessibility.
Now, you choose your meals and how much you want to pay per month, and it’s all delivered to you. All you do is heat it up. No more carb (or card) counting. No meetings or actually having to cook the meals.
That last point is important because the big flaw in most past diet plans was expecting the consumers to make the food taste like something they wanted to eat. Now that isn’t necessary.
NTRI has become a nutritional system as well as a weight loss system, which means growth is just beginning.
A-Rated Consumer Stocks to Buy: Malibu Boats Inc (MBUU)
Malibu Boats Inc (NASDAQ: MBUU) is the leading performance boat builder in the U.S., according to its website. And given its recent numbers, it’s easy to see why.
Last week, MBUU announced FYQ4 earnings and they were very bright, indeed. Net sales were up 12% versus the same quarter a year ago. Net income was up a staggering 151%, and net sales per unit was up 3.4%.
The last number is the average sale price of a boat. And it now stands at $74,807. You want to know why car sales and home sales are down? This may be the reason. People are now investing in high-end leisure products and shying away from other big ticket purchases and package travel deals.
And the trend is just getting started. MBUU is up 44% so far this year.
A-Rated Consumer Stocks to Buy: Lakeland Industries, Inc. (LAKE)
Lakeland Industries, Inc. (NASDAQ: LAKE) may not seem like a consumer-driven company, but it is in two senses.
First, it’s a business — safety clothing and accessories — that reflects the health of the economy. If businesses are expanding, and infrastructure is being built or rebuilt, then LAKE gear is going to be in demand. A strengthening economy means more money for consumers and more revenue for LAKE.
Second, Lakeland has a solid Q2, but the lack of spending on rescue gear in the U.S. as well as a slowdown in the energy patch had an effect on sales. And a strong dollar hurt overseas sales when converted back to dollars.
Two major hurricanes and pent up energy demand promise much bigger Q3 revenue. And a weakening dollar will also boost LAKE sales abroad. Up nearly 32% year-to-date, Q3 could move the needle even more for this relatively small ($109 million market cap) firm.
A-Rated Consumer Stocks to Buy: NVR, Inc. (NVR)
NVR, Inc. (NYSE: NVR) is one of the leading homebuilders in the U.S. It operates in 14 states east of the Mississippi, including big-city states like New York, Virginia, Florida, Pennsylvania and Illinois.
It builds under the brands Ryan Homes, NVHomes and Heartland Homes and most of the homes are in the sweet spot of the middle class market, especially in suburban locations around big cities.
The real estate market is in a transition period right now, where sales are slow but prices are rising. Experts view this situation as demand that’s growing faster than supply, which usually occurs when the sector is coming out of a cyclical downturn.
But this is the perfect time to find a builder like NVR, as the market transitions to an up cycle. The stock is already up 66% year-to-date, off the year’s lows. NVR still has plenty of headroom left, as new supply starts to catch up with demand.
A-Rated Consumer Stocks to Buy: Netflix, Inc. (NFLX)
Netflix, Inc. (NASDAQ:NFLX) is in it to win it when it comes to online content. Its two major competitors — Amazon.com, Inc. (NASDAQ:AMZN) and Apple Inc. (NASDAQ:AAPL) — are not focused like NFLX in this space.
To them, streaming content is about bringing new services to their dedicated bases. For example, AAPL announced a deal to spend $1 billion on original content in the next year. NFLX will spend $6 billion. AMZN can’t afford to plow a lot of money into content, so it partnered with Walt Disney Co (NYSE:DIS) so it could grow content but not its content bill.
NFLX is the pure play of the group and its original content is becoming even more powerful. Its international exposure continues to grow at a rapid clip, which is also helping NFLX leverage content across all its markets.
The stock continues to thrive, up almost 50% YTD. The amazing thing is, Netflix is just getting started.
A-Rated Consumer Stocks to Buy: iRobot Corporation
iRobot Corporation (NASDAQ:IRBT) doesn’t sell vacuums, it sells robots that vacuum. And that difference is very big in this sector.
Recently, IRBT stock tanked simply because a new low-priced competitor announced it was coming to market with a new robotic vacuum. The concern from a money management firm that makes its name sending out dire predictions of stocks it wants to short, said that this new entrant had gone after vacuum maker Dyson and certainly hurt sales of its high-end machines.
But the difference is, IRBT has always been about the programming. Its robotic vacuums and devices are valued for their programming as well as their ability to keep a tidy floor.
What’s more, IRBT has already stood up to the industry’s biggest and best names — including Dyson — and it has always prevailed due to its quality. And there’s no reason to think this will change anytime soon.
The stock is up nearly 40% YTD and it will continue to grow as consumers bring more robots into their homes.
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.