By Mary-Lynn Cesar for Kapitall.
American consumers averaged $98 in spending in May,
according to a
released this week. The spending estimate is $10 higher than
April's average and is the highest amount reported for May
since 2008. Daily consumer spending averaged $90 in May
Memorial Day weekend spending drove the spike in last month's
spending. Customers splashed out $134 a day on alcohol, barbecues,
gasoline, gardening, and the like during the three-day
weekend, resulting in the highest three-day average in six
Gallup thinks that the gain in May's daily average may signal
that the economy is improving. But the pollster
notes that the change in spending between May and June will paint a
better picture, considering that the average typically remains
unchanged or decreases.
The jump in daily consumer spending inspired us to look for
investment opportunities among consumer goods stocks. We
began with a universe of consumer goods stocks, excluding those
belonging to the appliances, auto manufacturers, auto
parts, business equipment, recreational vehicles, rubbers
and plastics, and trucks and other vehicles industries.
Gallup doesn't include home and vehicle purchases or monthly bills
in its poll, so that's why we removed those industries from our
Since the poll focuses on consumer spending, we decided to
screen our group of stocks for those experiencing
high sales growth quarter-over-quarter, with an
increase of 25% or higher
. Then we screened that group for stocks that are
rallying above their 20-day simple moving average (
), 50-day SMA, and 200-day SMA
. This shows that the stocks have upward momentum.
For our final screen, we looked for stocks that are
undervalued with a low price-to-sales (P/S)
because, just like consumers, investors like a bargain, when
possible. The P/S ratio compares a stock's price to what the
company generates in revenue. If a stock has a P/S below 1, it can
be considered undervalued.
However, it's important to point out that the ratio doesn't
factor in expenses or debt. Additionally, variation between
industries is normal, so it's most useful when comparing similar
companies or a company to the industry average. We screened
for stocks with P/S ratios below 2, which means that their market
caps aren't more than twice their annual sales.
We were left with three stocks on our list. Do you think these
consumer goods stocks will benefit from an increase in consumer
Click on the interactive chart to view data over
1. G-III Apparel Group, Ltd.
): Designs, manufactures, imports, and markets a range of outerwear
and sportswear apparel to retailers primarily in the United States.
Market cap at $1.70B, most recent closing price at $82.76.
Sales growth quarter-over-quarter is 26.00%.
The stock is rallying 11.61% above its 20-day SMA, 12.41% above
its 50-day SMA, and 26.20% above its 200-day SMA.
P/S at 1.16 vs. an industry average of 2.92.
2. Omega Protein Corp.
): Distributes fish meal and fish oil products in the United
States. Market cap at $303.68M, most recent closing price at
Sales growth quarter-over-quarter is 29.90%.
The stock is rallying 6.47% above its 20-day SMA, 14.87% above
its 50-day SMA, and 26.32% above its 200-day SMA.
P/S at 1.16 vs. an industry average of 1.83.
3. Revlon, Inc.
): Engages in the manufacture, marketing, and sale of cosmetics,
women's hair color, beauty tools, anti-perspirants/deodorants,
fragrances, skincare, and other beauty care products. Market cap at
$1.61B, most recent closing price at $30.77.
Sales growth quarter-over-quarter is 44.20%.
The stock is rallying 2.46% above its 20-day SMA, 8.51% above
its 50-day SMA, and 19.21% above its 200-day SMA.
P/S at 0.98 vs. an industry average of 2.71.
(List by Mary-Lynn Cesar. Price-to-sales data sourced from
Fidelity. Quarterly sales data sourced from Zacks Investment
Research. All other data sourced from finviz.)
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