Rising inclination towards self-medication, such as Over-The-Counter (OTC) drugs, nutritious supplements, and self-care products, are driving the growth of the consumer healthcare market. Therefore, it could be an opportune time to scoop up the shares of in-demand consumer goods stocks USANA Health Sciences, Inc. (USNA), Nature's Sunshine Products, Inc. (NATR), and LifeVantage Corporation (LFVN) to reap substantial returns.
Despite high inflation over the past year, the consumer goods sector delivered well and outperformed the wider market by a broad margin. The S&P Consumer Staples Select Sector index gained 3.4% over the past month, compared with 1.4% returns in the S&P 500.
Moreover, while the Fed’s aggressive rate hikes have had an overall negative impact on the economy, healthcare firms have stood out due to their growth and defensive nature. These businesses enjoy an inelastic demand for their goods and services despite obstacles, including rising inflation, supply chain problems, and labor shortages.
Over the past five years, the health store revenues have grown at a CAGR of 5.8% to reach $43.80 billion in 2023.
The demand for medical consumer goods such as OTC medications, nutritional supplements, and personal care is increasing thanks to growing consumer consciousness in the wake of individualistic health and contentment. The global consumer healthcare market is forecasted to be worth $322.93 billion by 2028, growing at a CAGR of 7.2%.
Furthermore, due to the rapidly rising demand for vital supplements, the global nutritional market is expected to expand at a CAGR of 8.7% to reach $380.12 billion by 2032.
Given this backdrop, investing in fundamentally sound consumer goods stocks USNA, NATR, and LVFN could be rewarding.
USANA Health Sciences, Inc. (USNA)
USNA develops and manufactures high-quality nutritional supplements, functional foods, and personal care products. The company offers USANA nutritional products that comprise essentials/CellSentials, such as vitamin and mineral supplements that provide a foundation of total body nutrition for various age groups.
Recently, USNA was recognized as a top brand for calcium supplements in Hong Kong by market research giant Euromonitor International. This reflects the company’s strong performance in offering quality nutritional products.
In terms of trailing-12-month USNA’s gross profit margin of 80.58% is 156.9% higher than the 31.37% industry average. Likewise, its trailing-12-month levered FCF margin of 9.78% is 268.4% higher than the industry average of 2.65%.
USNA’s net earnings for the fiscal fourth quarter ended December 31, 2022, amounted to $12.79 million and $0.66 per share. Its total current assets increased 5.3% year-over-year to $384.3 million compared to $365.12 million as of January 1, 2022.
Street expects USNA’s EPS and revenue to increase 15.1% and 3% year-over-year to $3.28 and $963.40 million, respectively, for the fiscal year 2024. The stock has gained 18.2% over the past three months to close the last trading session at $62.90.
USNA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Among the 13 stocks in the B-rated Medical - Consumer Goods industry, it is ranked #3. USNA is also rated an A in Value and Quality and a B in Stability and Sentiment. To see additional POWR Ratings for Growth and Momentum for USNA, click here.
Nature's Sunshine Products, Inc. (NATR)
NATR is a natural health and wellness company that is engaged in the manufacturing and direct selling of nutritional and personal care products. The company offers general health products related to blood sugar support, bone health, cellular health, sleep, sports, energy, and vision.
In terms of trailing-12-month NATR’s gross profit of 71.05% is 126.5% higher than the 31.37% industry average. Likewise, its trailing-12-month asset turnover ratio of 1.73x is 101.2% higher than the industry average of 0.86x.
NATR’s selling, general and administrative expenses decreased 14.5% year-over-year to $38.84 million for the fourth quarter that ended December 31, 2022. The company’s attributable net income and EPS amounted to $1.95 million and $0.10, respectively. Its total current liabilities came in at $65.58 million for the period that ended December 31, 2022, compared to $76.67 million for the period that ended December 31, 2021.
The consensus revenue estimate of $429.70 million for the fiscal year ending December 31, 2023, represents a marginal increase year-over-year. The consensus EPS estimate of $0.28 for the current year indicates a 600% year-over-year improvement. The company topped the revenue estimates in each of the trailing four quarters.
Over the past six months, the stock has gained 23.9% to close the last trading session at $10.21.
NATR’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. It has an A grade for Quality and Sentiment and B for Value. Within the same industry, it is ranked first.
Click here to see the additional ratings for NATR (Growth, Momentum, and Stability).
LifeVantage Corporation (LFVN)
LFVN is engaged in the identification, research, development, formulation, sale, and distribution of nutrigenomic activators, dietary supplements, nootropics, pre and pro-biotics, weight management, skin and hair care, bath and body, and targeted relief products.
On March 15, the company paid a quarterly dividend of $0.03 per share of its common stock to all the stockholders. The company’s four-year average dividend yield is 0.37%, and its current dividend translates to a 3.34% yield on the prevailing prices.
In terms of trailing-12-month LFVN’s gross profit margin of 80.28% is 155.9% higher than the 31.37% industry average. Likewise, its trailing-12-month assets turnover ratio of 2.95x is 243.4% higher than the industry average of 0.86x.
LFVN’s net revenues came in at $53.66 million for the fiscal second quarter that ended on December 31, 2022, up 2.8% year-over-year. Its non-GAAP adjusted EBITDA amounted to $794 thousand during the same period. Its total current liabilities came in at $23.33 million for the period that ended December 31, 2022, compared to $25.73 million as of June 30, 2022.
Analysts expect LFVN’s revenue to increase marginally year-over-year to $207.11 million in the fiscal year 2023. Its EPS is expected to grow by 12% per annum over the next five years. The company has an impressive earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters.
LFVN’s shares have gained 2% over the past five days to close the last trading day at $3.59.
LFVN’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. It has an A grade for Value and Quality and a B for Stability. Out of 13 stocks in the same A-rated industry, it is ranked #2.
Click here to see the other ratings of LFVN for Growth, Momentum, and Sentiment.
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USNA shares were trading at $64.34 per share on Monday afternoon, up $1.44 (+2.29%). Year-to-date, USNA has gained 20.94%, versus a 7.72% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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