The consumer goods space can be a fickle one, with the industry largely dependent on economic trends and consumers’ disposable income and tastes. While that creates a challenging operating environment, it also offers investors a wide variety of potential turnaround stories to keep on their radar.
However, there are a handful of consumer goods stocks whose dividends and reliable businesses make them a worthwhile long-term investment and volatility over the past few months has helped create some excellent entry points for several big-name brands.
With that in mind, here’s a look at 4 consumer goods stocks to keep on your radar.
Consumer Goods Stocks to Add to Your Cart:
Altria Group (MO)
It’s been a tough year for tobacco producer Altria Group Inc (NYSE:MO). MO stock has made its way more than 20% lower since January as investors questioned whether the firm would be able to overcome the public’s shifting attitude toward smoking. However, the company has been working to renew its product line with a focus on health-conscious tobacco products that don’t come with all of the nasty side effects that cigarettes do.
While traditional cigarettes have been on the outs, alternatives like liquid vapor cigarettes have gained popularity, giving Altria a new growth avenue to persue. The firm has been building out its alternative tobacco arsenal and although critics say the company might not survive the shift, the likelihood that tobacco will ever go totally out of fashion is slim.
Of course, there’s some risk in the betting on MO’s recovery plans — but the firm’s reliable dividend payments help to sweeten the deal. MO investors enjoy a hefty 5% dividend yield and the firm has a history of raising those payments consistently.
Consumer Goods Stocks to Add to Your Cart:
Procter & Gamble (PG)
It would be impossible to talk about consumer goods stocks to consider without including Procter & Gamble (NYSE:PG) in that list. The company is a tried and true long-term investment that may not be the most exciting investment choice, but it’s a solid stock that rounds out any portfolio. PG not only pays a 3.76% dividend yield, but the firm also offers investors a diversified business that includes a portfolio of necessary items like soap and toothpaste that will still see demand even in times of recession.
Although PG is often classed as a ‘boring’ investment, there are some exciting development’s on the company’s horizon. PG recently acquired Merk KGaA in an effort to build out its healthcare business. With the aging population rising rapidly, making a play in the healthcare space could become a massive new growth runway for PG that could help the share price return to its 2017 highs near $100 per share.
Consumer Goods Stocks to Add to Your Cart:
Conagra Brands (CAG)
Another consumer goods brand that looks to be on the verge of a turnaround is Conagra Brands Inc. (NYSE:CAG). CAG is another widely diversified business that encompasses several household brands like Hunt’s, Peter Pan and Healthy Choice. Not only has CAG been working to build out it’s pre-prepared, healthy options in a bid to attract more health-conscious consumers, but the firm is about to benefit from its Pinnacle Foods acquisition.
Pinnacle and Conagra together will create an even larger empire of household brands and their related businesses are expected to create cost synergies of $215 million by the end of 2022. That excess cash and massive market share will give CAG more room to continue readjusting its brand image and appealing to health-conscious consumers.
Although the acquisition will likely be a boon for CAG, the share price hasn’t reflected that providing interested investors with an excellent entry point.
Consumer Goods Stocks to Add to Your Cart:
Lululemon (LULU)
When it comes to investment, higher risk usually comes alongside higher potential returns and that’s been the case for athletic apparel brand Lululemon Athletica (NASDAQ:LULU) over the past year. For those who were willing to wait out the storm, it’s been a great few months as the company’s turnaround story finally materialized. LULU’s most recent earnings report showed that revenue was up 25% from a year earlier and comparable sales were up an impressive 20%.
The stock has risen substantially over the past year as the company’s financials improved, but investors are still tentative about the firm’s long-term future. That’s because the company has had trouble holding down a CEO and still hasn’t announced who will take former Chief Executive Officer Laurent Potdevin’s place. As long as the firm is able to find a replacement with a clean image that’s likely to stick around, the stock could be in for a long-term rally.
As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.
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