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Top Six Consumer Goods Stocks for 2010

NEW YORK ( TheStreet) -- As the 2009 -- and its associated marketplace horrors -- winds to a long-awaited close, we offer the top-six consumer goods stocks for 2010.

Scotts Miracle-Gro

While money and economic worries have reined in trips to the mall and movie theater of late, America has turned to an unlikely low-cost lifestyle surrogate: gardening. And in doing so, they having helped position Scotts Miracle-Gro (SMG - Get Report) as a solid play for 2010.

"Gardening was one of the country's fastest growing pastimes, as people stayed closer to their homes last year," says Connie Maneaty, an analyst at BMO Capital Markets, who cites Scotts as one of the consumer goods companies with the strongest potential over then coming 12 months. "They may do this again next year, and that fits with the company's strategy."

Maneaty points out that Scotts Miracle-Gro aims to increase its current market share in the Southeast (39%), West (43%) and Southwest (42%) to the dominant levels it already has in the Northeast (56%) and Midwest (52%). "Scotts Gro could grow a very strong business not as well represented in other markets, and that has presented them with really interesting opportunities," Maneaty says. Management believes this could drive an incremental $300 to $500 million in sales -- impressive for a mid-cap company that currently makes just over $3 billion in revenues.

Leading DIY stores including Home Depot (HD - Get Report), Lowe's (LOW - Get Report) and Wal-Mart (WMT - Get Report) sell the company's products widely throughout the year, but the company typically books around 70% to 75% of its yearly sales in the key second and third quarters -- the most important ones for its seasonal lawn and garden products.

Even the weak housing market could present an opportunity, as the company could benefit as eager sellers look to spruce up their properties for a quick sale, and opt to work on fixing up their lawns alongside a fresh coat of paint.

In 2009, Scotts Miracle-Gro grew sales 5% to a record $3.14 billion, driven by U.S. sales that grew at an even faster pace of 15%. Maneaty forecasts that Scotts Miracle-Gro will earn $3.20 per share next year, up 30% from adjusted 2009 earnings of $2.46.
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PM $80.35 0.00%


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