Concerns over record-high inflation, supply chain bottlenecks, growing geopolitical tensions, and the Fed's impending interest rate hikes continue to negatively impact investor sentiment. But while surging inflation has impacted the financials of numerous companies, consumer staples companies are well-positioned to pass on higher prices to customers and remain profitable due to the near-inelastic demand for their products.
Furthermore, according to recent reports from Bank of America, the total spending on credit and debit cards increased 12.3% year-over-year from early February, and 90% of consumers are expected to spend more on groceries, household, and personal items in the coming months.
Given this backdrop, Wall Street analysts expect fundamentally sound consumer defensive stocks Coty Inc. (COTY), Hims & Hers Health, Inc. (HIMS), and AppHarvest, Inc. (APPH), which are currently trading at less than $10, to deliver solid upside in the coming months.
Coty Inc. (COTY)
New York City-based COTY and its subsidiaries manufacture, market, distribute, and sell beauty products worldwide. The company offers prestige fragrances, skincare, and color cosmetics products through renowned retailers, including perfumeries, department stores, e-retailers, direct-to-consumer websites, and duty-free shops under reputed brands that include Alexander McQueen, Burberry, Calvin Klein, Gucci, and others.
Last month, COTY announced that Sally Hansen had launched an advanced virtual try-on tool, the first to market Perfect Corp.'s AgileHand Technology application, which allows consumers to easily experience hundreds of Sally Hansen nail color options in an expanded reality environment. Perfect Corp. is a well-known beauty and fashion tech solutions provider.
COTY's net revenue increased 11.5% year-over-year to $1.58 billion in the second quarter, ended Dec. 31, 2021. Its non-GAAP operating income grew 16.4% from its year-ago value to $236.30 million, while its non-GAAP net income improved 44.4% year-over-year to $147.7 million over the period. The company non-GAAP EPS amounted to $0.17.
Analysts expect COTY's revenue to increase 12.4% year-over-year to $1.16 billion in the third quarter, ended March 31, 2022.
The $13.75, 12-month median price target indicates an 87.1% potential upside. The price targets range from a low of $11.00 to a high of $20.00. The stock closed the last trading session at $7.35.
Hims & Hers Health, Inc. (HIMS)
HIMS functions as a multi-specialty telehealth platform connecting consumers to licensed healthcare professionals. The San Francisco-based concern also offers a wide range of health and wellness products and services available for purchase directly by customers or through its website or mobile application.
This month, HIMS announced a partnership with Goodpath, the integrative digital clinic. Under the partnership, HIMS will eventually have access to even more high educational content and programming examined by medical advisors to help members that need additional support for sleep, musculoskeletal (MSK) issues, back pain, and gastroesophageal reflux disease (GERD). The content will be accessible on the recently launched Hims & Hers mobile app.
Last month, HIMS announced a partnership with GNC Holdings, LLC (GNC), a health and wellness brand, to offer consumers health and wellness solutions at selected GNC stores nationwide and online on their website. "Our mass retail expansion is about building a trusted, nationwide brand for health and wellness products," said Melissa Baird, Chief Operating Officer of Hims & Hers.
In the fourth quarter, ended Dec. 31, 2021, HIMS' net revenue increased 104.3% year-over-year to $84.70 billion. Its gross profit grew 94.7% from its year-ago value to $62.10 billion over this period. Its cash and cash equivalent stood at $71.78 billion for its fiscal year ending Dec. 31, 2021. In addition, analysts expect HIMS' revenue to increase 75.9% year-over-year to $92.04 million in the first-quarter, ending March 31, 2022.
The 12-month median price target of $8.50 indicates a 96.3% potential upside. The price targets range from a low of $8.00 to a high of $9.00. The stock closed the last trading session at $4.33.
AppHarvest, Inc. (APPH)
APPH is a Moorehead, Ky.-based applied agricultural technology company that develops and operates indoor farms to grow non-GMO produce free of chemical pesticide residues. Its products comprise tomatoes and other fruits and vegetables, such as berries, peppers, cucumbers, and salad greens.
During the fourth quarter, ended Dec. 31, 2021, APPH's net sales came in at $3.07 billion. Its cash and cash equivalent stood at $150.76 billion for the year ending December 31, 2021.
Analysts expect AAPH's revenue to increase 154.5% year-over-year to $5.85 million in the first quarter, ending March 31, 2022. Over the past month, the stock has gained 85% in price to close its trading session at $5.68.
The 12-month median price target of $7.50 indicates a 32% potential upside. The price targets range from a low of $5.50 to a high of $11.00.
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COTY shares were trading at $7.77 per share on Tuesday afternoon, up $0.42 (+5.71%). Year-to-date, COTY has declined -26.00%, versus a -11.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
3 Consumer Defensive Stocks Under $10 Wall Street Predicts Will Rally 30% or More StockNews.com
