Consumer spending held well in July, with retail sales increasing 0.7% for the month, exceeding the 0.4% Dow Jones estimate. This increase in retail sales indicates that consumers are resilient and are willing to contribute to overall economic growth.
So, investors interested in investing in quality consumer stocks can consider buying The Procter & Gamble Company (PG), Kimberly-Clark de México, S. A. B. de C. V. (KCDMY), and United-Guardian, Inc. (UG).
According to the National Retail Federation, retail sales will increase between 4% and 6% in 2023.
NRF President and CEO Matthew Shay said. “While we expect growth to moderate in the year ahead, it will remain positive as retail sales stabilize to more historical levels. Retailers are prepared to serve consumers in the current economic environment by offering a range of products at affordable prices with great shopping experiences.”
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 fast-moving consumer goods market is expected to grow at a CAGR of 4.6% until 2030. The growing global middle-class population and the trend of digitalization in rural areas are driving market expansion.
Take a detailed look at the stocks mentioned above:
The Procter & Gamble Company (PG)
PG provides branded consumer packaged goods worldwide. It operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care.
PG’s trailing-12-month levered FCF margin of 15.54% is 340.9% higher than the industry average of 3.53%. Its trailing-12-month net income margin of 17.87% is 344.3% higher than the industry average of 4.02%.
PG’s net sales for the fourth quarter ended June 30, 2023, increased 5.3% year-over-year to $20.55 billion. The company’s gross profit increased 14.1% year-over-year to $9.94 billion. Its net income increased 10.9% year-over-year to $3.38 billion. Additionally, its EPS came in at $1.37, representing a 13.2% increase over the prior-year quarter.
The consensus revenue estimate of $85.57 billion for the year ending June 2024 represents a 4.4% increase year-over-year. Its EPS is expected to grow 8.4% year-over-year to $6.40 for the same period. It surpassed EPS estimates in three of four trailing quarters. PG’s shares have gained 8.1% over the past six months to close the last trading session at $151.83.
PG’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.
PG has an A grade for Stability and a B for Sentiment and Quality. It is ranked #20 out of 55 stocks in the Consumer Goods industry. Click here for the additional POWR Ratings for Growth, Value, Momentum, and Sentiment for PG.
Kimberly-Clark de México, S. A. B. de C. V. (KCDMY)
Based in Mexico City, Mexico, KCDMY manufactures and markets disposable and personal care products. Its offerings include baby diapers, training pants, swim pants, wet wipes, shampoos, creams, bar soaps, feminine pads, tampons, sprays, repellents, and more.
KCDMY’s trailing-12-month ROCE of 196.40% is significantly higher than the industry average of 11.24%. Its trailing-12-month ROTC of 20.51% is 215.6% higher than the industry average of 6.50%.
In the second quarter that ended June 30, 2023, KCDMY’s total revenues increased 6.4% year-over-year to Mex$13.71 billion ($796.44 million) while its gross profit increased 25.9% from the year-ago value to Mex$5.24 billion ($304.40 million).
Also, its net income and EBITDA came in at Mex$1.79 billion ($103.98 million) and Mex$3.51 billion ($203.90 million), representing increase of 52.8% and 31.2% year-over-year, respectively.
Street expects KCDMY’s revenue to increase 18.8% year-over-year to $3.19 billion for the year ending December 2023. Over the past year, the stock has gained 49.2% to close the last trading session at $11.13.
KCDMY’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 #5 in the same industry. It has an A grade for Stability and a B for Growth and Sentiment. To see additional KCDMY’s ratings for Value, Momentum and Quality, click here.
United-Guardian, Inc. (UG)
UG manufactures and markets cosmetic ingredients, pharmaceuticals, medical lubricants, and proprietary specialty industrial products in the United States and internationally.
UG’s trailing-12-month net income margin of 21.56% is 436% higher than the 4.02% industry average. Its trailing-12-month levered FCF margin of 14.12% is 300.6% higher than the 3.53% industry average.
For the second quarter that ended June 30, 2023, UG’s total costs and expenses decreased 12.1% year-over-year to $2.13 million. Its total assets came in at $11.88 million for the period that ended June 30, 2023, compared to $10.64 million for the period that ended December 31, 2022.
Also, its total current assets came in at $11.36 million, compared to $9.97 million for the same period.
The stock has lost 7.4% over the past month to close the last trading session at $7.54.
It’s no surprise that UG has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Quality and a B for Sentiment. It is ranked #7 in the same industry.
Beyond what is stated above, we’ve also rated UG for Value, Momentum, Stability and Growth. Get all UG ratings here.
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PG shares were trading at $152.92 per share on Wednesday morning, up $1.09 (+0.72%). Year-to-date, PG has gained 2.81%, versus a 16.41% 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.
3 Consumer Good Stocks That Possess Favorable Market Sentiment StockNews.com
