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10 Consumer Stocks for the Stay-at-Home Investor (Update1)


5. Tempur-Pedic International (TPX)

Company profile: Tempur-Pedic, with a market value of $12 billion, makes premium foam mattresses, pillows, and other sleep system products. About two-thirds of its sales are in the U.S.

Investor takeaway: Its shares are up 60% this year and have a three-year, average annual return of 121%. Analysts give its shares seven "buy" ratings, three "buy/holds," and four "holds," according to a survey of analysts by S&P. Analysts estimate it will earn $4.02 per share this year and$4.74 per share next year, an 18% increase.

S&P, which has its shares rated "buy," says: "We expect (it) to continue to gain market share due to its high-quality bedding products and increased public awareness of better mattresses and their effect on the quality of sleep." It's expected the company will benefit from an improving economy and a rise in home sales as that is when people tend to buy new bedding.

4. CVS Caremark (CVS)

Company profile: CVS, with a market value of $58 billion, is one of the nation's largest retail pharmacy chains, with more than 7,000 stores, and one of the biggest pharmacy benefit managers after its merger with Caremark. It also operates retail health clinics under the MinuteClinic brand.

Investor takeaway: Its shares are up 11.6% this year and have a three-year, average annual return of 18%. Analysts give its shares 10 "buy" ratings, 10 "buy/holds," four "holds," and one "weak hold," according to a survey of analysts by S&P. S&P has it rated "strong buy," with a $54 price target, which is a 31% premium to its current price and says the company stands to benefit from favorable demographics resulting in increased customer drug utilization and as a significant increase in generic drug offerings boosts operating margins.

3. Dollar General (DG)

Company profile: Dollar General, with a market value of $16 billion, is the largest dollar-store chain in the U.S., with more than 9,300 stores in 35 states.

Investor takeaway: Its shares are up 11% this year and have a 45% return over the past year. Analysts give its shares 11 "buy" ratings, seven "buy/holds," and eight "holds," according to a survey of analysts by S&P. Despite its obvious appeal in a tough economy, this store chain has proven it may continue to do well no matter the economic environment.

S&P says "we see (it) retaining existing customers and gaining new higher-income shoppers with its focused assortment of consumables, including expanded health and beauty aid offerings." Analysts estimate it will earn $2.32 per share in 2012, and $2.72, in 2013, or 17% growth. Last week it reported that its fourth-quarter earnings rose 31% on a rise in same-store sales. For the quarter ended Feb. 3, the company reported earnings of 85 cents per share, versus 64 cents last year, besting analysts' 82 cents per share estimate. Sales grew 20%, to $4.2 billion.

2. Home Depot (HD)

Company profile: Home Depot, with a market value of $76 billion, is the world's largest home-improvement retailer with over 2,000 warehouse-style stores, primarily in North America.

Investor takeaway: Its shares are up 20% this year and have a three-year, average annual return of 31%. Analysts give its shares 13 "buy" ratings, four "buy/holds," 14 "holds," and one "weak hold," according to a survey of analysts by S&P, which itself has it rated "sell," on valuation concerns.

Home Depot has weathered the economic slowdown in fine shape. An economic recovery and a rise in home sales will benefit the company as consumers spruce up their homes for resale or to make long-postponed improvements. Sales and earnings peaked in 2007, but the past three years have shown steady improvement.

1. Amazon (AMZN)

Company profile: Amazon, with a market value of $91 billion, is the highest-grossing online retailer in the world, with $48.1 billion in net sales in 2011.

Investor takeaway: Its shares are up 19% this year and have a three-year, average annual return of 43%. Analysts give its shares 18 "buy" ratings, six "buy/holds," and 15 "holds," according to a survey of analysts by S&P. Analysts estimate it will earn $1.27 per share this year and $2.61 per share next year, a 106% increase.

S&P has it rated "hold," on valuation concerns, but it sounds plenty bullish, saying "we consider Amazon a best-in-class retailer that generates significant free cash flow" and that its various initiatives will result in continued strong sales results and significant margin expansion.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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