BOSTON (TheStreet) -- With crude oil costing more than $100 a barrel, the Middle East region on the brink and the Federal Reserve ending its bond-buying program soon, investors' sentiment has turned. Just yesterday, the S&P 500 fell 1.9% after jumping 24% since September. The following consumer-staples stocks -- shares of companies that produce goods needed to live -- are ranked highest by TheStreet's quantitative equity model.
Of note: Several of the following stocks represent food-products companies, which are subject to higher costs due to the recent rise in commodity prices. Their ability to pass on increased prices to consumers, without affecting demand, varies on a case-by-case basis.
stock model incorporates both fundamental and technical factors. The stocks are ordered by net score, from good to great.
is a confectioner.
Hershey's fourth-quarter net income increased 6.9% to $136 million and earnings per share rose 7.3% to 59 cents, helped by a smaller float. Revenue grew 5.4% to $1.5 billion. Hershey's gross margin widened from 44% to 46%, but its operating margin narrowed from 17% to 16%. Hershey held $885 million of cash and $1.8 billion of debt at quarter's end, for a quick ratio of one and a debt-to-equity ratio of two. It pays a quarterly dividend of 35 cents, equal to a yield of 2.6% with a payout ratio of 59%. Hershey has grown profit 33% a year, on average, since 2008.
The stock has been a top performer in the packaged foods industry, having risen 29% in the past 12 months and 15% annually, on average, since 2008. It trades at a premium to food products peer averages, costing 24-times trailing earnings, 18-times forward earnings and 2.2-times sales. Its cash flow multiple of 14 reflects a discount of 26% to the industry average. Of analysts covering Hershey, six, or 33%, advise purchasing its shares, 11 suggest holding and one advocates selling them.
offers the highest target, at $60, implying 12% of upside in the next 12 months.
sells jams and jellies.
Smucker's fiscal third-quarter profit declined 2.6% to $132 million, or $1.11 a share, though revenue ascended 8.8% to $1.3 billion. The gross margin contracted from 40% to 39%, but the operating margin inched up from 19% to nearly 20%. Smucker held $588 million of cash and $1.3 billion of debt at quarter's end, for a quick ratio of 2.1 and a debt-to-equity ratio of 0.2. Smucker pays a quarterly dividend of 44 cents, converting to a yield of 2.5% with a payout ratio of 39%. Smucker has grown net income 42% a year, on average, since 2008 as its stock returned 13% annually, on average.
Smucker shares have appreciated 19% in the past 12 months. They sell for a trailing earnings multiple of 17, a forward earnings multiple of 14 and a book value multiple of 1.6, 34%, 15% and 64% discounts to food products peer averages. Of equity researchers following Smucker, seven, or 47%, rate its stock "buy", seven rate it "hold" and one ranks it "sell."
RBC Capital Markets
ranks it "outperform" with a $75 12-month target, suggesting a rise of 6.8%.
is pessimistic, rating Smucker "underperform" and expecting it to drop 12% to $62 in 12 months.
sells meat products.
Hormel's fiscal first-quarter profit climbed 34% to $149 million, or 55 cents a share, as revenue increased 11%. The gross margin rose from 20% to 21% and the operating margin extended from 10% to nearly 12%. Hormel held $650 million of cash and no debt at quarter's end. Cash rose 45% year-over-year and debt fell from $350 million. Hormel pays a quarterly dividend of 13 cents, converting to a yield of 1.9% with a payout ratio of 29%. Hormel has grown net income 11% and earnings per share 12% a year since 2008 as its stock climbed 11% annually, on average.
Hormel has advanced 1% in March as indices corrected, proving its countercyclical appeal. It trades at a trailing earnings multiple of 17, a book value multiple of 2.9, a sales multiple of 1 and a cash flow multiple of 14, 31%, 33%, 36% and 25% discounts to food products peer averages. Of stock analysts evaluating Hormel, four, or 29%, recommend buying its shares, nine say to hold and one advocates selling.
is bullish, forecasting an advance of 12% to $31 in 12 months. In contrast,
ranks the stock "sell", expecting a fall to $22.
Church & Dwight
sells household products.
Church & Dwight's fourth-quarter profit decreased 11% to $47 million, or 65 cents a share, as revenue declined 2.1% to $657 million. The gross and operating margins remained steady at 47% and 16%, respectively. Church & Dwight held $189 million of cash and $340 million of debt at fourth-quarter's end, for a quick ratio of 0.9 and a debt-to-equity ratio of 0.2. Church & Dwight pays a quarterly dividend of 34 cents, equaling an annual yield of 1.8%. The company has grown net income 17% annually, on average, since 2008 as its stock rose 14% a year.
Church & Dwight has appreciated 14% in 12 months and 8.2% in four weeks, despite heightened volatility in equity markets. It sells for a trailing earnings multiple of 21, a forward earnings multiple of 16, a sales multiple of 2.1 and a cash flow multiple of 13, modest premiums to household products peer averages. Of researchers following the company, nine, or 47%, advocate purchasing its shares, nine recommend holding and one suggests selling them.
rates the stock "buy", expecting a rise of 13%.
rates the stock "hold", predicting a drop to $70.
sells spices and seasonings.
Fourth-quarter profit increased 15% to $134 million, or 99 cents a share, as revenue expanded 5.9% to $979 million. The gross margin declined from 49% to 48% and the operating margin fell from 20% to 19%. McCormick held $51 million of cash, up 29% year-over-year, and $880 million of debt, down 11% year-over-year, at quarter's end, for a quick ratio of 0.5 and a debt-to-equity ratio of 0.6. McCormick pays a dividend of 28 cents, converting to a yield of 2.3% with a payout ratio of 39%. McCormick has grown net income 17% a year, on average, since 2008.
McCormick's stock has advanced 27% in 12 months and 7.9% in four weeks. It trades at a forward earnings multiple of 16, a book value multiple of 4.5, a sales multiple of 2 and a cash flow multiple of 17, near parity with food products industry averages. Of equity analysts evaluating McCormick, six, or 40%, advise purchasing its shares and nine recommend holding them. None advocate selling the stock.
Janney Montgomery Scott
offers a target of $52, suggesting another 7% of upside.
ranks the stock "equal weight" and predicts that it will drop to $44.
-- Written by Jake Lynch in Boston.
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