Consumer Goods: Profitable Consumer Stocks With Strong Inventory Trends

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Do you expect U.S. economic growth to continue moving higher? One way to gain exposure to economic activity is with consumer goods stocks. These companies gain the majority of their revenues through consumer spending, which incidentally comprises around 70% of economic activity in the U.S.

For ideas on how to analyze the industry, we ran a screen beginning with consumer goods stocks rallying above their 20-day, 50-day, and 200-day moving averages, indicating that these stocks have upward momentum that may persist.

We then screened for impressive profitability, with higher gross, operating, and pre-tax margins than the industry averages.


Finally, we screened for those with strong sales trends, comparing growth in revenue to changes in inventory year over year. We screened for companies seeing higher growth in revenue than inventory over this time period, as well as inventory comprising a decreasing portion of current assets.

Business section: Investing ideas
Below are the final results of this screen. These consumer goods companies currently have strong market sentiment and are rallying above their moving averages. They also have superior profitability and positive trends in sales relative to inventory.

Do you think these companies will continue to benefit as the U.S. economy recovers? (Click here to access free, interactive tools to analyze these ideas.)

1. Estee Lauder Companies (NYS: EL) : Engages in the manufacture, marketing, and sale of skin care, makeup, fragrance, and hair care products worldwide. The stock is currently trading 1.30% above its 20-day MA, 5.10% above its 50-day MA, and 16.60% above its 200-day MA. TTM gross margin at 82.13% vs. industry average at 71.12%. TTM operating margin at 14.73% vs. industry average at 13.28%.TTM pre-tax margin at 13.2% vs. industry average at 10.41%. Revenue grew by 9.85% during the most recent quarter ($2,737.5M vs. $2,492M y/y). Inventory grew by 3.69% during the same time period ($898.9M vs. $866.9M y/y). Inventory, as a percentage of current assets, decreased from 24.67% to 23.95% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31)

2. Hasbro (NYS: HAS) : Engages in the design, manufacture, and marketing of games and toys. The stock is currently trading 3.56% above its 20-day MA, 4.67% above its 50-day MA, and 2.26% above its 200-day MA. TTM gross margin at 51.06% vs. industry average at 43.29%. TTM operating margin at 14.2% vs. industry average at 12.33%.TTM pre-tax margin at 11.35% vs. industry average at 10.64%. Revenue grew by 3.96% during the most recent quarter ($1,329.34M vs. $1,278.7M y/y). Inventory grew by -8.29% during the same time period ($333.99M vs. $364.19M y/y). Inventory, as a percentage of current assets, decreased from 16.4% to 14.82% during the most recent quarter (comparing 13 weeks ending 2011-12-25 to 13 weeks ending 2010-12-26)

3. Jarden Corp. (NYS: JAH) : Distributes consumer products worldwide. The stock is currently trading 3.43% above its 20-day MA, 11.46% above its 50-day MA, and 25.01% above its 200-day MA. TTM gross margin at 30.37% vs. industry average at 26.69%. TTM operating margin at 9.39% vs. industry average at 5.67%.TTM pre-tax margin at 4.95% vs. industry average at 2.76%. Revenue grew by 3.19% during the most recent quarter ($1,738M vs. $1,684.2M y/y). Inventory grew by -1.56% during the same time period ($1,274.4M vs. $1,294.6M y/y). Inventory, as a percentage of current assets, decreased from 38.41% to 36.48% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31)

4. Philip Morris International (NYS: PM) : Engages in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States. The stock is currently trading 1.89% above its 20-day MA, 7.26% above its 50-day MA, and 21.02% above its 200-day MA. TTM gross margin at 68.54% vs. industry average at 61.92%. TTM operating margin at 43.22% vs. industry average at 35.93%.TTM pre-tax margin at 40.3% vs. industry average at 32.01%. Revenue grew by 6.% during the most recent quarter ($18,876M vs. $17,807M y/y). Inventory grew by -2.37% during the same time period ($8,120M vs. $8,317M y/y). Inventory, as a percentage of current assets, decreased from 60.46% to 54.65% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31)

5. Shuffle Master (NAS: SHFL) : Develops, manufactures, and markets technology and entertainment-based products for the gaming industry worldwide. The stock is currently trading 2.79% above its 20-day MA, 15.21% above its 50-day MA, and 55.35% above its 200-day MA. TTM gross margin at 69.74% vs. industry average at 36.72%. TTM operating margin at 20.99% vs. industry average at 19.2%.TTM pre-tax margin at 19.85% vs. industry average at 17.44%. Revenue grew by 27.94% during the most recent quarter ($56.05M vs. $43.81M y/y). Inventory grew by -23.39% during the same time period ($24.69M vs. $32.23M y/y). Inventory, as a percentage of current assets, decreased from 29.95% to 24.58% during the most recent quarter (comparing 3 months ending 2012-01-31 to 3 months ending 2011-01-31)

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


Kapitall's Alexander Crawford does not own any of the shares mentioned above. Data sourced from Google Finance and Finviz.

At the time this article was published Motley Fool newsletter services have recommended buying shares of Philip Morris International and Hasbro. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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