Major U.S. stock indexes scored back-to-back gains on Tuesday as investors waited on an inflation update due today. Stocks have been on the upswing ahead of a key inflation reading for June, with the consumer-price index expected to show further progress in a retreat from its peak above 9% last summer, which should benefit the consumer goods sector.
Therefore, investors could consider quality consumer goods stocks LVMH Moët Hennessy - Louis Vuitton, Société Européenne (LVMUY), The Procter & Gamble Company (PG), and ACCO Brands Corporation (ACCO). These stocks are rated B (Buy) in our proprietary rating system.
The National Retail Federation issued its annual forecast, anticipating that retail sales will grow between 4% and 6% this year. In total, NRF projects that retail sales will reach between $5.13 trillion and $5.23 trillion this year.
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.”
In addition, demographic, political, and technological shifts indicating change and innovation are expected to influence consumer trends and demand. The global Consumer Goods sector is expected to increase to $224.33 billion by 2032, at a CAGR of 7.8%.
Take a look at the stocks mentioned above:
LVMH Moët Hennessy - Louis Vuitton, Société Européenne (LVMUY)
Headquartered in Paris, France, LVMUY operates as a luxury goods company worldwide. The company offers champagne, wines, and spirits under the Clos des Lambrays, Dom Pérignon, Ruinart, Moét & Chandon, and other brands.
LVMUY pays $3.08 annually as dividends which translates to a yield of 1.69% at the current price. Its four-year average dividend yield is 1.30%. Its dividend payouts have grown at 23.5% CAGR over the past three years.
LVMUY’s trailing-12-month EBITDA margin of 30.19% is 183.4% higher than the 10.65% industry average. Its trailing-12-month net income margin of 17.79% is 323.6% higher than the 4.20% industry average.
During the fiscal year ended December 31, 2022, LVMUY’s revenue increased 23.3% year-over-year to €79.18 billion ($87.13 billion). Net profit, group share increased 17% year-over-year to €14.08 billion ($15.49 billion) and group share of net earnings per share increased 17.3% year-over-year to €28.03.
Analysts expect LVMUY’s revenue for the fiscal second quarter ending June 2023 to increase 23.1% year-over-year to $23.34 billion. Also, it has surpassed revenue estimates in three of the trailing four quarters, which is remarkable.
Shares of LVMUY have gained 57.7% over the past nine months to close the last trading session at $187.57.
LVMUY’s POWR Ratings reflect its promising 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.
The stock has a B grade for Stability and Quality. It is ranked #14 out of 54 stocks in the Consumer Goods industry.
Beyond what is stated above, we’ve also rated LVMUY for Growth, Value, Momentum, and Sentiment. Get all LVMUY ratings here.
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.
On July 11, 2023, PG declared a quarterly dividend of $0.9407 per share on the common stock and on the Series A and Series B ESOP Convertible Class A Preferred Stock of the company, payable on or after August 15, 2023.
PG pays $3.76 annually as dividends which translates to a yield of 2.53% at the current price. Its four-year average dividend yield is 2.42%. Its dividend payouts have grown at 6.7% CAGR over the past three years.
On June 20, 2023, PG launched a new haircare microsite HairDNA, aiming to solve consumers' biggest hair queries via expert advice from the world's leading brands, exclusively on Lazada, Southeast Asia's pioneer e-commerce platform.
PG’s trailing-12-month EBITDA margin of 26.23% is 164.4% higher than the 9.92% industry average. Its trailing-12-month net income margin of 17.69% is 460.6% higher than the 3.16% industry average.
PG's net sales increased 3.5% year-over-year to $20.07 billion in the fiscal third quarter that ended March 31, 2023. Its net earnings increased 1.7% year-over-year to $3.42 billion. Also, its net earnings per share increased 3% year-over-year to $1.37.
Street expects PG’s revenue for the fiscal fourth quarter ended June 2023 to increase 2.3% year-over-year to $19.96 billion. Its EPS is expected to increase 9.1% year-over-year to $1.32 for the same quarter. Also, it has surpassed revenue estimates in each of the trailing four quarters.
The stock has gained 19.2% over the past nine months to close the last trading session at $148.08.
PG’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
PG has an A grade for Stability and a B in Quality and Sentiment. It is ranked #13 in the same industry.
Click here to see the additional POWR Ratings for PG (Growth, Momentum, and Value).
ACCO Brands Corporation (ACCO)
ACCO designs, 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 pays $0.30 annually as dividends which translates to a yield of 5.31% at the current price. Its four-year average dividend yield is 3.88%. Its dividend payouts have grown at 38% CAGR over the past five years.
ACCO’s trailing-12-month levered FCF margin of 8.21% is 56.5% higher than the 5.24% industry average.
ACCO’s net sales came in at $402.60 million in the fiscal first quarter, which ended March 31, 2023. Operating income increased 48.5% year-over-year to $10.10 million. Also, adjusted EBITDA remained flat at $38.80 million and total operating cost decreased 3.2% year-over-year to $109.20 million.
ACCO’s EPS for the fiscal second quarter ended June 2023 is expected to be $0.29. Its revenue is expected to be $488.52 million for the same quarter.
The stock has gained 12.1% over the past month to close the last trading session at $5.67.
ACCO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
ACCO also has a B grade for Value and Sentiment. It is ranked #12 in the same industry.
For ACCO’s Momentum, Stability, Quality, and Growth, click here.
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LVMUY shares rose $1.11 (+0.59%) in premarket trading Wednesday. Year-to-date, LVMUY has gained 30.30%, versus a 17.39% 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.
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