The consumer goods industry encompasses a diverse array of products that cater to consumers' everyday needs and preferences worldwide. From personal care items to electronic devices, the consumer goods sector plays a crucial role in driving economic growth, shaping consumer lifestyles, and influencing market trends.
Given the industry’s tailwinds, investors could consider buying fundamentally sound consumer stocks, Levi Strauss & Co. (LEVI), Chewy, Inc. (CHWY), and Ennis, Inc. (EBF).
Technology integration, particularly through artificial intelligence, is enabling more personalized customer experiences, efficient product development, and improved supply chain management. Digital tools are also helping companies reduce costs and accelerate innovation, giving leaders a competitive edge.
Additionally, according to Statista, the consumer goods market is projected to reach $2.80 trillion in 2024, with an expected CAGR of 1.2% by 2029. This sector with strong brand loyalty could offer a stable investment choice, as companies enjoy consistent demand for their products, even during economic downturns. Loyal customers are less sensitive to price changes, helping maintain reliable cash flow.
Considering these favorable trends, let’s take a closer look at the fundamentals of the three Consumer Goods picks, starting with number #3.
Stock #3: Levi Strauss & Co. (LEVI)
LEVI designs, markets, and sells apparel and related accessories for men, women, and children worldwide. The company offers jeans, casual and dress pants, activewear, tops, shorts, skirts, dresses, jumpsuits, shirts, sweaters, jackets, footwear, and related accessories under the Levi's, Dockers, Signature by Levi Strauss & Co., Denizen, and Beyond Yoga brands.
LEVI’s trailing-12-month levered FCF margin and EBIT margin of 9.98% and 9.36% are 111.8% and 16.9% higher than the industry averages of 4.71% and 8.01%, respectively.
For the fiscal third quarter that ended August 25, 2024, LEVI’s net revenues increased 47.6% year-over-year to $1.52 billion. Its operating income stood at $30.30 million. Also, the company’s adjusted EBITDA rose 25.6% from the year-ago value to $225.30 million.
Moreover, LEVI’s adjusted net income and adjusted EPS came in at $131.90 million and $0.33, increased 17.8% and 17.9% year-over-year, respectively.
Analysts expect LEVI’s revenue for the fiscal fourth quarter ending November 2024 to increase 5.2% year-over-year to $1.73 billion. In addition, the company’s EPS for the same quarter is expected to increase 9.2% year-over-year to $0.48.
Shares of LEVI have surged 10.3% over the past year and 3.5% year-to-date to close the last trading session at $17.11.
LEVI’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
LEVI has a B grade for Growth, Sentiment, and Quality. The stock is ranked #6 out of 55 stocks in the Consumer Goods industry.
To see the other ratings of LEVI for Value, Momentum, and Stability, click here.
Stock #2: Chewy, Inc. (CHWY)
CHWY engages in the pure-play e-commerce business in the United States. It provides pet food and treats, pet supplies and pet medications, and other pet health products, as well as pet services for dogs, cats, fish, birds, small pets, horses, and reptiles through its retail websites and mobile applications.
In terms of the trailing-12-month ROCE, CHWY’s 85.16% is 698.2% higher than the 10.67% industry average. Its 11.69% trailing-12-month ROTA is 198.7% higher than the 3.91% industry average.
CHWY’s net sales for the third quarter ended July 28, 2024, increased 2.5% year-over-year to $2.86 billion. The company’s gross profit rose 7% over the prior-year quarter to $843.84 million. In addition, its net income and EPS rose considerably from the year-ago values to $299.12 million and $0.68, respectively.
For the quarter ended October 31, 2024, CHWY’s EPS and revenue are expected to increase 51.5% and 4.3% year-over-year to $0.23 and 2.86 billion, respectively. It surpassed Street EPS estimates in each of the trailing four quarters. CHWY’s stock has gained 70.6% over the past year to close the trading session at $34.62.
CHWY’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, translating to a Buy in our proprietary rating system.
It has an A grade for Growth and Sentiment and a B for Quality. It is ranked #5 in the same industry. To access additional grades of CHWY for Stability, Momentum, and Value ratings, click here.
Stock #1: Ennis, Inc. (EBF)
EBF manufactures and sells business forms and other business products in the United States. The company offers snap sets, continuous forms, laser cut sheets, tags, labels, envelopes, integrated products, jumbo rolls, and pressure-sensitive products under the Ennis, Royal Business Forms, Block Graphics, 360º Custom Labels, ColorWorx, Enfusion, Uncompromised Check Solutions, VersaSeal, and Ad Concepts.
EBF’s trailing-12-month EBIT margin and net income margin of 12.81% and 10.15% are 23.3% and 55.3% higher than the industry averages of 10.38% and 6.54%, respectively.
EBF’s net earnings for the fiscal second quarter that ended August 31, 2024, were reported at $10.31 million. The company’s gross profit stood at $29.78 million. Also, its net earnings were reported at $10.31 million and 0.40 per share. Furthermore, the company’s total assets stood at $406.81 million as of August 31, 2024, compared to $399.19 million as of February 29, 2024.
The company’s revenue is expected to be $98.30 million for the third quarter ending November 2024. The company’s EPS is expected to be $0.39 for the same quarter.
Over the past month, EBF’s stock has gained 3.1% to close the last trading session at $21.15.
EBF’s POWR Ratings reflect its solid prospects. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
EBF has an A grade for Quality and a B for Value. Within the same industry, it is ranked #2.
To see EBF’s additional ratings for Stability, Growth, Momentum, and Sentiment, click here.
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LEVI shares were trading at $16.87 per share on Tuesday afternoon, down $0.24 (-1.40%). Year-to-date, LEVI has gained 4.83%, versus a 27.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
3 Consumer Goods Stocks With Strong Brand Loyalty StockNews.com
