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The consumer goods industry is poised for strong growth this year on the back of strong consumer spending and the potential for interest rate cuts. Against this backdrop, high-quality consumer goods stocks Helen of Troy Limited (HELE), Virco Manufacturing (VIRC), and Henkel AG & Co. KGaA (HENKY) are solid choices to strengthen your investment strategy. This could be a buying factor. read….
The consumer goods industry is gaining momentum due to increased consumer spending. Additionally, a potential interest rate cut in 2024 could stimulate consumer spending and increase demand for consumer goods. Therefore, investors may consider buying consumer staples stocks that are fundamentally strong. Helen of Troy Limited (Helle), Barco Manufacturing Co., Ltd. (VIRC), Henkel AG & Co. KGaA (Henkey) This could enhance your investment strategy.
The US economy is showing strong growth due to solid consumer spending and rising business investment. consumer spendingEconomic growth, which accounts for more than two-thirds of U.S. economic activity, rose 3.3%, boosting GDP growth by 2.20 percentage points and beating expectations.
Consumer spending has shown remarkable resilience even as the Fed has raised interest rates to fight inflation. As the Federal Reserve considers interest rate cuts later this year, demand for consumer goods is expected to increase significantly due to factors such as a softening job market and easing inflation. Such cuts could boost the economy and benefit the sector.
of global consumer goods industry It is expected to reach $224.33 billion by 2032, growing at a CAGR of 7.8%.
Additionally, the inherent nature of consumer goods creates consistent product demand regardless of fluctuating economic conditions. This consistency provides substantial stability to companies in this sector and positions consumer staples stocks as potentially safe investment options.
Let’s examine the fundamentals of three stocks to buy based on industry tailwinds. consumer goods The industry starts with the third.
Stock #3: Helen of Troy Limited (Helle)
HELE offers a variety of consumer products in the United States, Canada, Europe, the Middle East, Africa, Asia Pacific and Latin America, and operates in the Home & Outdoor and Beauty & Wellness segments.
HELE had operating cash of $391.18 million in the trailing twelve months, which was 38.5% higher than the industry average of $282.42 million.subsequent 12 months Net income Leveraged FCF margins of 8.10% and 15.86% are 71.8% and 185.8% higher than the industry averages of 4.72% and 5.55%, respectively.
HELE’s net revenue and adjusted operating income for the fiscal third quarter ended November 30, 2023 were $549.62 million and $89.81 million, respectively. Furthermore, adjusted EBITDA was $97.82 million.
Adjusted earnings for the quarter increased slightly year-over-year to $66.39 million, and adjusted EPS increased 1.5% year-over-year to $2.79.
Street expects HELE’s revenue and EPS to increase 1.6% and 7.6% year-over-year to $482.13 million and $2.09, respectively, for the fiscal first quarter ending May 2024. .
The company has surpassed consensus revenue and EPS estimates in each of the trailing four quarters, which is great.
Shares have increased 16.3% over the past year, closing at $110.72. It has risen 2.5% over the past nine months.
Helle-san power rating reflects that positive outlook. The stock has an overall rating of B, which equates to a “buy” according to our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to the best degree.
HELE has a B for growth, value and quality. Within B rating consumer goods It ranks 11th out of 50 stocks in the industry.
To see additional POWR ratings for HELE Momentum, Stability, and Sentiment, visit click here.
Stock #2: Virco Manufacturing Corporation (VIRC)
VIRC designs, manufactures, and sells furniture in the United States. The company manufactures a variety of products, including mobile tables, mobile storage equipment, desks, technology tables, chairs, activity tables, folding chairs, and folding tables.
On February 27, VIRC announced a cash dividend of $0.02 per common share for the first quarter of fiscal 2025, to be paid to shareholders on April 10. The annual dividend of $0.04 per share translates into a current dividend yield of 0.36%. Stock price.
Additionally, the Board of Directors has authorized an open market stock repurchase program of up to $5 million. Combined with rising stock prices, these measures re-establish a balanced portfolio of shareholder returns, allowing individual shareholders to choose interests that allow them to share in the gains from current income and capital growth.
VIRC’s trailing twelve month asset turnover ratio of 1.76x is 121.5% higher than the industry average of 0.80x. Over the past 12 months, gross profit margin was 42.59% and net profit margin was 10.68%, which was 39.4% and 81.2% higher than the industry average of 30.55% and 5.89%, respectively.
VIRC’s net sales and gross profit for the fiscal third quarter ended October 31, 2023 were $84.25 million and $38.21 million, respectively, an increase of 8.9% and 24.2% from the same period last year.
Net income and net income per common share for the quarter were $10.16 million and $0.62, an increase of 29% and 29.2%, respectively, from the same period last year. As of October 31, 2023, VIRC’s total current assets were $98.84 million and as of October 31, 2022, they were $89.55 million.
Street expects VIRC’s revenue and EPS to increase 8.1% and 27.4% year over year to $289 million and $1.72, respectively, for the fiscal year ending January 2025. The company has exceeded consensus EPS estimates in each of his four subsequent quarters, and has exceeded consensus earnings estimates in three of his subsequent four quarters.
Shares have increased 184.4% over the past year, closing at $11.26. It has risen 170% in the past nine months.
VIRC’s POWR Rating reflects this promising outlook. Our unique rating system gives an overall rating of “B”, indicating “Purchase”.
VIRC has an A grade for Sentiment and a B grade for Value, Momentum, and Quality. Ranked 10th within the same industry.
For other VIRC evaluations (growth and stability), see click here.
Stock #1: Henkel AG & Co. KGaA (Henkey)
HENKY is headquartered in Düsseldorf, Germany and is active in adhesive technology and beauty care, laundry and home care businesses around the world. He operates in two segments: adhesive technology and consumer brands.
On March 25, HENKY and Adobe expanded their partnership to advance HENKY’s content supply chain with the power of generative AI and enable personalization at scale across the company’s global brand portfolio. For this purpose, Adobe Firefly and Adobe Experience Cloud solutions will be used in HENKY’s digital business platform RAQN.
The annual dividend is $0.50 per share, which translates to a dividend yield of 2.77% at the current stock price. The four-year average yield is 2.70%. Over the past five years, HENKY’s dividends have increased at his 3.5% CAGR.
HENKY’s operating cash for the trailing twelve months was $3.59 billion, which was 310.4% higher than the industry average of $875.53 million. Trailing 12-month net income and leveraged FCF margin were 6.13% and 13.96%, which were 20.7% and 169.6% higher than the industry average of 5.07% and 5.18%, respectively.
For the year ending December 31, 2023, HENKY’s sales were 21.51 billion euros ($23.13 billion) and gross profit was 9.66 billion euros ($10.39 billion), an increase of 3.1% year-on-year. became. Additionally, free cash flow increased 298.6% year-on-year to 2.6 billion euros ($2.8 billion).
Net income attributable to HENKY shareholders and earnings per common share for the year were 1.32 billion euros ($1.42 billion) and 3.13 euros, an increase of 4.7% and 6.8%, respectively, from the previous year.
Street expects HENKY’s sales to be $5.67 billion in the first quarter of its fiscal year ending March 2024. The company beat consensus revenue estimates in three of his four subsequent quarters.
Shares have increased 14.8% over the past six months, closing at $18.03. It has risen 4.8% in the past month.
HENKY’s solid outlook is reflected in its POWR rating. This stock has an overall rating of ‘A’, which is equivalent to a ‘strong buy’ in our proprietary rating system.
HENKY has an A grade for stability and a B grade for growth, value and quality. Ranked 3rd in the industry.
click here Click here for additional POWR ratings for HENKY (Momentum and Sentiment).
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HENKY stock was unchanged in premarket trading Wednesday. Year-to-date, HENKY has fallen -0.11%, while the benchmark S&P 500 index has risen 9.50% during the same period.
About the author: Neha Panjwani
Neha has had a deep interest in finance since her school days, a passion that led her to a career as an investment analyst after completing a bachelor’s degree in commerce. Neha is currently enrolled in the CFA program and is dedicated to further deepening her understanding of the fundamentals of investing. Neha’s main objective is to help individual investors identify the best investment opportunities by passionately evaluating the key aspects of financial products, primarily focusing on stocks and her ETFs. is. Her focus is on empowering individuals to make informed and strategic investment decisions in a dynamic financial world.
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