The Reuter's/University of Michigan's Consumer sentiment index rose more than 3 points from mid-month to 73.5. The advance from the final August reading was nearly 8 points. Consumer sentiment is directly related to the strength of consumer spending. Any positive change in the index is generally reflected in the performance of index such as the Consumer Staples Select Sector Index (IXR) or exchange traded fund (ETFs) such as The Vanguard Consumer Staples ETF (VDC).
Consumer staples sector is made up of companies whose businesses are less sensitive to economic cycles. It includes manufacturers and distributors of food, beverages, and tobacco, as well as producers of nondurable household goods and personal products. It also includes food and drug retailing companies as well as hypermarkets and consumer super centers.
Stock picking based on SWOT analysis
Since March 2009 lows, IXR has been showing a secular uptrend. Out of the 41 stocks that comprise IXR, 10 stocks are likely to experience stock price declines over the next year. Of the remaining 31, I have picked seven based on their strengths, weaknesses, threats, and opportunities (SWOT) analysis.
Hansen Natural Corp., (HANS): sales leader in the US energy drinks and fruit juice sector
In 2008 Hansen Natural delivered 16th consecutive year of record sales. Additionally, as a brand, Monster Energy achieved over $1 billion in gross sales for the first time, while continuing to increase its market share.
HANS posted $0.60 vs. $0.51 Q2 EPS on 6.4% net sales rise on the strength of Monster Energy drinks.
I believe the company's trademarks, and broad beverage portfolio will enable it to continue to build on its status as the volume leader in the energy and fruit juice industry.
Currently, the stock is trading at $37.69, compared to 52 week range of $20.56/$44.02. The company is likely to breach $40 mark by end 2009.
Coca-Cola Co (KO): attractively valued by historic measures
The Coca-Cola Company is the world's largest producer of soft drink concentrates and syrups, as well as the world's biggest producer of juice and juice-related products.
The company paid dividends to share owners each year since 1920, and has increased its dividend payments annually for the last 47 years. I expect the company to deliver yearly earnings growth of 10% through 2013, and produce free cash flow of $30 billion. Growth will be driven by opportunities in the emerging markets.
Currently, the stock is trading at $54.92, compared to 52 week range of $54.35/$55.21. The company is likely to breach $57 mark by end 2009.
Chattem Inc.
