Consumer Stocks: Predictive Analysts Think These Consumer Stocks Will Outperform

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(List compiled by Becca Lipman. Predictive data sourced from Reuters. All other data from Finviz.)

August failed to add any new jobs for the first time in 11 months. The U.S. Labor Department reported these figures in contrast to the 85,000 jobs gained in July. August's stats failed to include the 45,000 Verizon employees on strike – those numbers will be reflected in September’s report.

“Wall Street stocks promptly lost more than 2 percent of their value at the opening of trading. The Dow Jones industrial average fell 210 points Friday morning to 11,280.07,” reports New York Times.

These figures do nothing to help consumer confidence, which is already reading at a depressing 45.5. Nor does it help the high level of Americans (30%) who fear for their job security.

This translates to more saving, less spending, less demand for goods, and further unemployment. The economic cycle dictates this will continue until some higher power, such as the government, steps in to boost demand for industry and employment.

Given that the cash-strapped government already spent its funds in a wildly unsuccessful manner, the future seems glim.

That said, the economy will one day improve. Surely, if history repeats itself, as it’s apt to do, the future will be bullish and prosperous once more. The big question is when that future will begin.

And despite the depressing statistics plaguing America from nearly every angle, New York Times writes, “While there is still a chance that the United States can slip into a double-dip recession, economists believe that the economy will stay in growth mode, albeit at levels barely perceptible, much less comforting, to Americans without jobs.”

The only certainty in the near future may be uncertainty, but all the same we decided to check out the more upbeat side of U.S. consumer goods companies.

Below we offer a list of consumer goods stocks that analysts with a history of correctly predicting performance expect to outperform. After all, if those analysts are bullish on a company, it is probably worthwhile to take a second look.

Using analyst ratings from Reuters that are presented on a linear scale (with 1 = "Strong Buy" and 5 = "Strong Sell"). We sliced the analyst ratings data into three time periods separated by a month, and identified the group of analysts that have shown predictive value, i.e. been able to accurately predict the direction of stock moves for two consecutive time periods.

We further narrowed down the list by only focusing on those stocks with market caps over $2 Bilion (to control for stability), and that have seen bullish trends in analyst opinion. In other words, predictive analysts, with a proven (short-term) track record of predicting their stock's direction, think these stocks are due for a rebound.

The future looks grim for the U.S. consumer, but predictive analysts and short sellers have high hopes for these companies, what do you think?

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1. Ball Corporation (BLL): Packaging & Containers Industry. Market cap of $5.84B. Mean average rating changed from 1.82 to 1.92 between 06/03/11 and 07/03/11 (bearish change).

Analysts correctly predicted the direction of the stock over the next month, with the stock generating an alpha of -0.71%. Analysts also got it right between 07/03/11 and 08/02/11, with the mean rating changing from 1.92 to 1.91 (bullish change).

Over the following month, the stock generated an alpha of 1.6% relative to the S&P 500 index, as predicted by the analysts. This same group of analysts now expect the stock to outperform in the future, with the mean rating changing from 1.91 to 1.8 between 06/07/03 and 04/18/03 (i.e. bullish change). The stock has gained 22.14% over the last year.

2. Coach Inc. (COH): Textile Footwear & Accessories Industry. Market cap of $16.01B. Mean average rating changed from 1.88 to 2.04 between 06/03/11 and 07/03/11 (bearish change).

Analysts correctly predicted the direction of the stock over the next month, with the stock generating an alpha of -2.32%. Analysts also got it right between 07/03/11 and 08/02/11, with the mean rating changing from 2.04 to 2.08 (bearish change).

Over the following month, the stock generated an alpha of -5.3% relative to the S&P 500 index, as predicted by the analysts. This same group of analysts now expect the stock to outperform in the future, with the mean rating changing from 2.08 to 1.96 between 06/07/03 and 04/18/03 (i.e. bullish change). The stock has had a couple of great days, gaining 8.1% over the last week.

3. Ecolab Inc. (ECL): Cleaning Products Industry. Market cap of $12.16B. Mean average rating changed from 1.89 to 1.9 between 06/03/11 and 07/03/11 (bearish change).

Analysts correctly predicted the direction of the stock over the next month, with the stock generating an alpha of -7.67%. Analysts also got it right between 07/03/11 and 08/02/11, with the mean rating changing from 1.9 to 1.89 (bullish change).

Over the following month, the stock generated an alpha of 11.95% relative to the S&P 500 index, as predicted by the analysts. This same group of analysts now expect the stock to outperform in the future, with the mean rating changing from 1.89 to 1.58 between 08/02/11 and 09/01/11 (i.e. bullish change). The stock has had a couple of great days, gaining 5.28% over the last week.

4. Kraft Foods Inc. (KFT): Food Diversified Industry. Market cap of $61.48B. Mean average rating changed from 2 to 1.91 between 06/03/11 and 07/03/11 (bullish change).

Analysts correctly predicted the direction of the stock over the next month, with the stock generating an alpha of 2.11%. Analysts also got it right between 07/03/11 and 08/02/11, with the mean rating changing from 1.91 to 1.86 (bullish change).

Over the following month, the stock generated an alpha of 5.92% relative to the S&P 500 index, as predicted by the analysts. This same group of analysts now expect the stock to outperform in the future, with the mean rating changing from 1.86 to 1.8 between 08/02/11 and 09/01/11 (i.e. bullish change). The stock has gained 18.89% over the last year.

5. Mead Johnson Nutrition Company (MJN): Processed & Packaged Goods Industry. Market cap of $14.45B. Mean average rating changed from 2.5 to 2.4 between 06/03/11 and 07/03/11 (bullish change).

Analysts correctly predicted the direction of the stock over the next month, with the stock generating an alpha of 6.44%. Analysts also got it right between 07/03/11 and 08/02/11, with the mean rating changing from 2.4 to 2.36 (bullish change).

Over the following month, the stock generated an alpha of 5.07% relative to the S&P 500 index, as predicted by the analysts. This same group of analysts now expect the stock to outperform in the future, with the mean rating changing from 2.36 to 2.21 between 08/02/11 and 09/01/11 (i.e. bullish change). The stock has had a couple of great days, gaining 5.21% over the last week.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks

Referenced Stocks: BLL , COH , ECL , KFT , MJN

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