Should Investors Consider These Top Consumer Stocks For Their Portfolio’s Before 2021?
Consumer stocks have had a turbulent year in the stock market. These stocks are long time favorites among investors for their high-yielding dividends. This would be the best time of the year for top consumer stocks because it is the holiday season after all. With the coronavirus pandemic flipping the industry in 2020, it did have varying implications on consumer stocks. Some have come out stronger while others have declared bankruptcy. You would ask why is there such a disparity between consumer stocks?
The answer lies in how they have adapted to this new era. Consumer stocks that have invested in their e-commerce platforms, as well as retailers who have shifted their focus online, will thrive. Traditional brick-and-mortar stores on the other hand would not fare so well. You only need to look at top consumer stocks like Amazon (AMZN Stock Report) and JD.com (JD Stock Report) to see how well these companies have done. Furthermore, with the Pfizer (PFE Stock Report) vaccine being rolled out in parts of the world, consumer stocks could begin to rally. As a world that is vaccinated to the coronavirus becomes a reality, things could get back to how they were.
Surprising enough, the S&P 500 Consumer Discretionary, which focuses on consumer and retail stocks have steadily climbed by over 80% since the March lows. Could this figure continue to climb as the global economy potentially rebounds in 2021 thanks to ongoing vaccination efforts? The question is, should investors start looking into consumer stocks now then? With all things said, here are 3 of the best consumer stocks that you should be watching today.
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Best Consumer Stocks To Buy [Or Sell]: Nike Inc.
Nike (NKE Stock Report) is a household name when it comes to apparel, footwear, and sports equipment. The company is headquartered in Oregon and has been in the consumer market for over 50 years. The apparel veteran is a Fortune 500 company and is the world’s largest athletic apparel maker. Nike shares are up by over 100% since the March lows. The company is set to announce its second-quarter financial results today.
How will the company fare in its anticipated earnings call tomorrow? By looking at its first-quarter fiscal posted in September, it paints a promising picture. Nike reported an impressive revenue of $10.6 billion. Its direct sales were up by 12%, at $3.7 billion. Unsurprisingly, the company’s digital sales increased by 82% with double-digit increases across North America, Greater China, and the Asia Pacific. Nike also reported diluted earnings per share of $0.95, which is up by 10%. Company CEO, John Donahoe had this to say, “Our results this quarter continue to demonstrate NIKE’s full competitive advantage, as we strengthen our position in the midst of disruption.”
Last month, the company announced a 12% increase in its quarterly dividend. This is impressive as it will be the 19th consecutive year of Nike increasing its dividend payouts. This reflects the company’s financial strength and strong track record of returning capital to shareholders while continuing to invest in capabilities that will accelerate its digital transformation. With such an excellent financial record, will you consider adding NKE stocks to your portfolio?
Best Consumer Stocks To Buy [Or Sell]: Peloton
Peloton (PTON Stock Report) is an exercise equipment and media company that has humble beginnings. It was founded in 2012 and launched with a Kickstarter funding campaign in 2013. The company has benefitted from lockdown measures during the coronavirus pandemic. As more people stayed at home, they resorted to training equipment that could be placed in their homes.
The company’s share price is up by a staggering 350% year-to-date, with a jump of nearly 20% hike in December alone. In its first-quarter fiscal posted in November, the company reported a total revenue increase of 232%, at $757.9 million. Its Connected Fitness Subscriptions grew by 137% to 1.33 million subscribers. Peloton expects revenue of $1 billion in its second-quarter guidance. With the holiday seasons, this is a realistic goal for the company. This outlook also reflects the better-than-expected reception for the company’s Bike+. To cope with the increasing demand for its products, the company has been significantly expanding its manufacturing capabilities as well.
These are truly exciting times for the company as it was recently selected to be a part of the Nasdaq 100 Index. With Peloton joining this exclusive list, it could attract more institutional investors. The company also plans to attract 100 million subscriptions in the coming years and has consistently provided a 100% annual revenue growth for the 6th consecutive year. All things considered, do you think PTON stock will be able to continue this momentum in 2021?
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Best Consumer Stocks To Buy [Or Sell]: The Home Depot
Last on this list of top consumer stocks is Home Depot (HD Stock Report). The company is the world’s largest home improvement retailer and has over 2,200 stores across North America. It also boasts more than 1 million products online. The company’s shares are up by over 70% since the March lows.
In the company’s third-quarter fiscal posted last month, the company reported net sales of $33.5 billion. This is a 23.2% increase year-over-year. Comparable sales for the third quarter increased by 24.1% compared to a year earlier. Net earnings for the quarter of fiscal 2020 was $3.4 billion or $3.18 per diluted share. Overall, this was an exceptional quarter for Home Depot as it saw a continuation of outsized demand for home improvement projects. The company was also able to effectively adapt to this high-demand environment.
Last month, the company announced that it will declare a third-quarter cash dividend of $1.50 per share. This will be the 135th consecutive quarter for the company to have paid a cash dividend. The company announced that it will be investing approximately $1 billion into supporting its associates in annualized permanent compensation enhancements for front liners and hourly associates. This is in line with Home Depot’s policy of taking care of its customers and associates first and the rest will take care of itself. Will HD stock be a top consumer stock to watch?