3 Consumer Discretionary Stocks to Trade Despite Higher Prices Consumer discretionary goods have been bearing the brunt of GDP growth contraction and declining consumer sentiment. However, the sector has still managed to outperform the broader market. Therefore, quality consumer...
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Consumer discretionary goods have been bearing the brunt of GDP growth contraction and declining consumer sentiment. However, the sector has still managed to outperform the broader market. Therefore, quality consumer discretionary stocks Mannatech (MTEX), Pandora (PANDY), and The Procter & Gamble (PG), which are rated Buy in our proprietary rating system, could be ideal trading options despite soaring prices. Keep reading….
U.S. inflation hit a record 40-year high of 9.1% in June 2022. The Fed is gearing to announce another 75 bps hike in July, hammering consumer sentiments as they assess the possibility of a recession. Moreover, the IMF has now slashed its 2022 U.S. growth forecast to 2.3% from 2.9%.
U.S. GDP could also contract in the second quarter, in line with the first quarter's decline, and consumer discretionary goods, which are highly dependent on business cycle phases, have been bearing the brunt.
However, the Consumer Discretionary Select Sector SPDR ETF (XLY) gained 2.3% over the past month compared to the SPDR S&P 500 Trust ETF's (SPY) marginal gains.
So, despite soaring prices, fundamentally sound consumer discretionary stocks Mannatech, Incorporated (MTEX), Pandora A/S (PANDY), and The Procter & Gamble Company (PG) could be ideal trading options. These stocks are rated Buy in our proprietary POWR Ratings system.
Mannatech, Incorporated (MTEX)
MTEX operates as a health and wellness company worldwide. It develops, markets, and sells nutritional supplements, topical and skin care and anti-aging products, and weight-management products.
For the first quarter that ended March 31, 2022, MTEX's total operating expenses decreased 10.8% year-over-year to $25.26 million. Its total assets came in at $61.14 million for the period ended March 31, 2022, compared to $59.63 million for the period ended December 31, 2021.
MTEX's EPS is estimated to grow 17.5% per annum for the next five years. Over the past month, the stock has lost 11.3% to close the last trading session at $18.49.
MTEX's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
MTEX has an A grade for Growth, Value, and Quality and a B grade for Sentiment. It is ranked first among 60 stocks in the Consumer Goods industry. Click here for the additional MTEX ratings for Momentum and Stability.
Pandora A/S (PANDY)
Headquartered in Copenhagen, Denmark, PANDY designs, manufactures, and markets hand-finished and contemporary jewelry worldwide. The company's products primarily include charms, bracelets, rings, earrings, necklaces, and pendants, and it operates through a network of 2,619 concept stores.
On June 21, 2022, PANDY announced its decision to acquire the distribution and sales network of Visão do Tempo, the company's distributor in Portugal, a top market in Western Europe. The acquisition aims to enhance PANDY's brand development in the European country via advanced network expansion strategies.
PANDY's revenue increased 26.4% year-over-year to DKK5.69 billion ($771.02 million) for its 2022 first quarter. Net profit for the period came in at DKK995 million ($134.85 million), up 58.4% year-over-year. Also, its EPS came in at DKK10.40, up 65.1% year-over-year.
PANDY's revenue is expected to increase 6.3% year-over-year to $3.80 billion in 2023. The stock has lost 6.1% over the past month to close the last trading session at $16.26.
PANDY's overall B rating translates to a Buy in our proprietary rating system. Moreover, it has an A grade for Quality.
Within the Consumer Goods industry, PANDY is ranked #3. Click here for the additional POWR Ratings for Growth, Value, Momentum, Stability, and Sentiment for PANDY.
The Procter & Gamble Company (PG)
PG provides branded consumer packaged goods to consumers in North and Latin America, Europe, the Asia Pacific, Greater China, India, the Middle East, and Africa. It operates in five segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care.
On June 8, 2022, PG and Microsoft Corp. (MSFT) announced their collaboration, by virtue of which MSFT Cloud will assist the future of digital manufacturing at PG.
PG CIO Vittorio Cretella said, "Together with Microsoft, P&G intends to make manufacturing smarter by enabling scalable predictive quality, predictive maintenance, controlled release, touchless operations, and manufacturing sustainability optimization — which has not been done at this scale in the manufacturing space to date."
PG's net sales came in at $19.38 billion for its third quarter ended March 31, 2022, up 7% year-over-year. Its net earnings came in at $3.35 billion, up 2.6% year-over-year, while its EPS came in at $1.33, up 5.6% year-over-year.
For 2022, analysts expect PG's revenue to increase 5.2% year-over-year to $80.08 billion. Its EPS is estimated to grow 5.1% per annum for the next five years. Moreover, it surpassed EPS estimates in each of the four trailing quarters. Over the past month, the stock has gained 9.5% to close the last trading session at $145.07.
PG's overall B rating equates to a Buy in our POWR Ratings system. In addition, it has a B grade for stability and quality.
Within the Consumer Goods industry, it is ranked #4. Click here for the additional POWR Ratings for Growth, Value, Momentum, and Sentiment for PG.
MTEX shares were unchanged in premarket trading Monday. Year-to-date, MTEX has declined -51.01%, versus a -18.31% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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