Consumer spending held well in August, with retail sales rising 0.6% month-on-month. This increase in retail sales indicates that consumers are secure in their ability to spend and are willing to contribute to overall economic growth.
So, investors interested in investing in quality consumer stocks can consider buying ACCO Brands Corporation (ACCO), Mannatech, Incorporated (MTEX), and Henkel AG & Co. KGaA (HENKY) this week.
During the coming holiday season, which runs from November 1 to December 24, retail sales in the United States, excluding automobiles, are predicted to rise 3.7% year-on-year.
According to Mastercard, this predicted growth shows American customers’ long-term resilience. This positive outlook shows their confidence in the economy and a desire to support businesses during this crucial time.
The global consumer goods industry is expected to grow to $224.33 billion by 2032 at a CAGR of 7.8% as markets adapt to shifting trends driven by digital innovation, the pandemic, and the focus on sustainable living. In addition, the global Fast Moving Consumer Goods (FMCG) market is predicted to grow at a CAGR of 5% until 2031, reaching $15.21 trillion.
With these favorable trends in mind, let’s delve into the fundamentals of the three best Consumer Goods stocks, beginning with number 3.
Stock #3: ACCO Brands Corporation (ACCO)
ACCO manufactures and markets consumer, school, technology, and office products. It operates through three segments: ACCO Brands North America, ACCO Brands EMEA, and ACCO Brands International.
ACCO’s trailing-12-month levered FCF margin of 8.06% is 45% higher than the industry average of 5.56%.
ACCO’s forward EV/Sales multiple of 0.87 is 46.9% lower than the 1.64 industry average. Also, its forward Price/Sales multiple is trading at 0.29, 78.5% lower than the industry average of 1.33.
ACCO has paid dividends for four consecutive years. Over the last three years, ACCO’s dividend payouts have grown at 4.9% CAGR. ACCO’s four-year average dividend yield is 4.03%. Its forward annual dividend of $0.30 translates to a 5.22% yield.
For the fiscal second quarter ended June 30, 2023, ACCO’s net sales came in at $493.60 million. Its adjusted operating income increased 13.9% year-over-year, $66.20 million. The company’s adjusted net income rose 1.4% year-over-year to $36.50 million.
Its adjusted EPS came in at $0.38, representing an increase of 2.7% year-over-year. In addition, its adjusted EBITDA rose 8.7% year-over-year to $77.60 million.
The consensus revenue estimate of $1.95 billion for the year ending December 2024 represents a 2.1% increase year-over-year. Its EPS is expected to grow 20% year-over-year to $1.32 for the same period. ACCO’s shares have gained 14.9% over the past year to close the last trading session at $5.77.
ACCO’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, translating to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ACCO has a B grade for Growth, Value and Sentiment. It is ranked #8 out of 53 stocks in the Consumer Goods industry. Click here for the additional POWR Ratings for Stability, Momentum, and Quality for ACCO.
Stock #2: Mannatech, Incorporated (MTEX)
MTEX is a global health and wellness company. It develops, markets, and sells nutritional supplements; topical and skin care and anti-aging products; and weight-management and fitness products. The company sells its products directly and through e-commerce and network marketing channels.
MTEX’s trailing-12-month gross profit margin of 76.23% is 131.7% higher than the industry average of 32.90%. Its trailing-12-month asset turnover ratio of 2.62x is 188.5% higher than the industry average of 0.91x.
MTEX’s trailing-12-month EV/Sales multiple of 0.13 is 92.7% lower than the 1.73 industry average. Also, its trailing-12-month Price/Sales multiple is trading at 0.15, 86.4% lower than the industry average of 1.09.
MTEX has paid dividends for five consecutive years. Over the last three years, MTEX’s dividend payouts have grown at 3.9% CAGR. MTEX’s four-year average dividend yield is 6.39%. Its forward annual dividend of $0.80 translates to a 7.41% yield.
MTEX reported net sales of $32.59 million for the second quarter ended June 30, 2023. Its gross profit came in at $25.59 million for the period. The company’s current assets stood at $31.25 million as of June 30. 2023. Also, its current liabilities lowered to $28.24 million as of June 30, 2023, compared to $29.84 million as of December 31, 2022.
Street expects MTEX’s EPS to grow by 17.5% per annum over the next five years. Shares of MTEX has lost 2.4% intraday to close the last trading session at $10.54.
MTEX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It is ranked #4 in the same industry. It has an A grade for Value and Quality and a B for Sentiment. To see additional MTEX’s ratings for Growth, Momentum and Stability, click here.
Stock #1: Henkel AG & Co. KGaA (HENKY)
Headquartered in Düsseldorf, Germany, HENKY and its subsidiaries engage in adhesive technologies, beauty care, and laundry and home care businesses worldwide.
HENKY’s trailing-12-month net income margin of 6.14% is 47.9% higher than the 4.15% industry average. Its trailing-12-month levered FCF margin of 6.38% is 87.2% higher than the 3.41% industry average.
HENKY’s forward EV/EBITDA multiple of 8.46 is 25.2% lower than the 11.31 industry average. Also, its forward EV/EBIT multiple is trading at 11.01, 25.8% lower than the industry average of 14.83.
HENKY has paid dividends for 26 consecutive years. HENKY’s four-year average dividend yield is 2.61%. Its forward annual dividend of $0.50 translates to a 3.25% yield.
During the first half that ended on June 30, 2023, HENKY’s sales increased marginally year-over-year to €10.93 billion ($11.88 billion). Its adjusted operating profit rose 7.6% from the year-ago value to €1.25 billion ($1.39 billion).
In addition, the company’s attributable adjusted net earnings improved 6.5% year-over-year to €894 million ($971.63 million). While its adjusted earnings per share came in at €2.13, up 9.2% year-over-year.
Analysts expect HENKY’s revenue for year ending December 2023 is projected to be $22.98 billion. The stock has gained 11.8% over the past year to close the last trading session at $15.51.
It’s no surprise that HENKY has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Stability and a B for Value and Quality. It is ranked #3 in the same industry.
Beyond what is stated above, we’ve also rated HENKY for Momentum, Sentiment and Growth. Get all HENKY ratings here.
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ACCO shares were trading at $5.72 per share on Thursday afternoon, down $0.05 (-0.87%). Year-to-date, ACCO has gained 6.76%, versus a 13.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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