Federal Reserve Chairman Jerome Powell has signaled that the central bank would slow its rapid rate hikes, thereby lifting investor sentiment. Powell has stated that the rate hike slowdown might come as soon as December.
Moreover, U.S. consumer spending came in strong for October as inflation moderated. The Commerce Department stated that consumer spending jumped 0.8% after an unrevised 0.6% increase in September. Inflation-adjusted consumer spending rose 0.5%, the highest since January, and the economy grew at a 2.9% pace in the third quarter.
Therefore, fundamentally strong consumer goods stocks Colgate-Palmolive Company (CL) and Ennis, Inc. (EBF) might be worthy investments now. However, the fundamentally weak stock Vinco Ventures, Inc. (BBIG) might be best avoided.
Stocks to Buy:
Colgate-Palmolive Company (CL)
CL is a global consumer products company that primarily operates through its two segments: Pet Nutrition; and Oral, Personal, and Home Care. The company distributes its products through wholesalers, e-commerce retailers, and distributors.
On September 15, CL announced that its net zero emission targets had been approved by The SBTi (Science Based Targets initiative). This approval underscores the company’s commitment to sustainability.
In the same month, CL declared a quarterly dividend of $0.47 per common share, which was payable on November 15. This reflects on the shareholder return ability of the company.
CL’s net sales increased marginally year-over-year to $4.46 billion in the fiscal third quarter ended September 30. Its total oral, personal, and home care net sales also increased marginally from the prior-year quarter to $3.58 billion. Its net income, including non-controlling interests, rose marginally year-over-year to $682 million, while its earnings per common share came in at $0.74.
For the fiscal year ending December 2023, CL’s revenue and EPS are expected to grow 2.3% and 6.6% year-over-year to $18.32 billion and $3.16, respectively. Moreover, CL has an impressive surprise earnings history, as it has topped consensus EPS estimates in three of the four trailing quarters.
The stock has gained 5.4% over the past month and marginally over the past five days to close the last trading session at $77.75.
CL’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CL has an A grade for Quality and a B for Stability. It ranked #9 in the 59-stock Consumer Goods industry.
Click here to see CL’s additional POWR Ratings for Momentum, Value, Growth, and Sentiment.
Ennis, Inc. (EBF)
EBF manufactures, designs, and sells business forms and other business products. The company offers snap sets, continuous forms, laser cut sheets, tags, labels, envelopes, integrated products, jumbo rolls, and pressure-sensitive products. It also provides point-of-purchase advertising for the large franchise and fast-food chains.
On November 30, EBF announced its acquisition of printing, yearbook publishing, and marketing-related services provider School Photo Marketing in Morganville. This addition is expected to open up possibilities to service a new channel.
On September 16, EBF’s Board of Directors declared a quarterly dividend of 25 cents per share on its common stock. The dividend was payable on November 4, 2022. This reflects the company’s strong cash generation ability.
For the fiscal second quarter that ended August 31, EBF’s revenues increased 10.7% year-over-year to $111.23 million. The company’s net earnings increased 63.5% year-over-year to $12.19 million.
Moreover, its non-GAAP EBITDA increased 38.8% year-over-year to $21.26 million, while its EPS came in at $0.47, representing a 62.1% year-over-year growth.
Street expects EBF’s EPS and revenue for the fiscal third quarter (ended November 2022) to increase 44.8% and 7% year-over-year to $0.42 and $110.20 million, respectively.
The stock has gained 22.5% over the past year to close the last trading session at $23.16. It is up 28.7% over the past six months.
It’s no surprise that EBF has an overall A rating, which translates to a Strong Buy in our POWR Ratings system. It also has an A grade for Quality and a B for Stability, Growth, and Sentiment. It is ranked #1 in the Consumer Goods industry.
Click here for the additional EBF ratings (Momentum and Value).
Stock to Avoid:
Vinco Ventures, Inc. (BBIG)
BBIG commercializes and develops end-to-end products like kitchenware, toys, baby products, pet care, health and beauty aids, small appliances, entertainment venue merchandise, and housewares.
On November 28, BBIG received a notice from the Listing Qualifications Department of the Nasdaq Stock Market LLC regarding its failure to comply with the requirement to timely file its quarterly report on Form 10-Q for the quarter ended September 30, 2022, with the SEC, whose deadline was November 14, 2022.
For the fiscal first quarter that ended March 31, the company’s net loss attributable to BBIG worsened 497% from the prior-year period to $372.95 million, while its net loss per share from continuing operations came in at $3.05. Its gross profit declined 34.1% from the prior-year period to $601.16 thousand.
The stock has plummeted 62.7% over the past year and 58.3% year-to-date to close the last trading session at $0.68.
BBIG’s bleak prospects are reflected in its POWR Ratings. The stock’s overall F rating equates to a Strong Sell in our proprietary rating system.
The stock also has an F grade for Stability, Value, and Quality and a D for Growth, Momentum, and Sentiment. It is ranked last in the same industry.
To see the POWR Ratings for BBIG, click here.
CL shares were trading at $77.92 per share on Friday afternoon, up $0.17 (+0.22%). Year-to-date, CL has declined -6.48%, versus a -13.71% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
2 Consumer Goods Stocks to Buy Before the End of 2022 and 1 to Avoid StockNews.com
