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Goldman's 11 Best Consumer Stocks for 2011

10. Staples (SPLS) sells office supplies and furniture through its retail stores and on the Web.

During the past three years, Staples has grown revenue 8.3% annually, on average. Fiscal third-quarter net income increased 7.1% to $289 million and earnings per share stretched 8.1% to 40 cents. The operating margin widened from 7.4% to 8%. Staples will announce fiscal fourth-quarter results on March 3. Its stock is up 9% in three months.

Of researchers covering Staples, 15, or 71%, advise purchasing its shares, five recommend holding and one suggests selling them. Credit Suisse offers the highest 12-month target, at $29, implying 30% of upside. Goldman's $26 target is consistent with a 16% rise. The bank believes that earnings growth bottomed during the third quarter and Staples is due for double-digit earnings per share growth on a share buyback. The bank cites the "tepid employment recovery, slow small business spending trends and secular stagnation in paper and ink consumption" as headwinds to the company that are already priced into its stock. Outperformance or material improvement on any of these fronts will cause investors to pay a higher multiple for Staples, according to Goldman.
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