Top 7 Consumer Stocks to Own For 2017

Retail and consumer stocks have been hit hard lately, due in large part to the rise of e-commerce and Amazon ( AMZN) seemingly swallowing up everything in its sight. But if investors look close enough, there are bargains out there, ones that may have outsized returns.
 
Credit Suisse has put together a list of 140 "top ideas" covered by their analysts, using several parameters to weed out weaker companies and pick only the best ideas. Market caps, growth and valued companies, as well as a variety of different sectors were chosen.
 
As part of the investment process, each analyst ranked up to three stocks on a six and twelve month time horizon, only picking "high conviction ideas." Since not every analyst had three stocks that could make the list, they were allowed to pick fewer than three names.
 
TheStreet looked at some of the recommendations from analysts and broke it down even further, looking at seven of the best retail and consumer stocks from Credit Suisse's U.S. Focus List.
 
 

Nordstrom
Nordstrom

Name: Nordstrom

Market Cap: $7.74 billion

Recent Price: $46

Price Target: $52

Credit Suisse analyst Christian Buss thinks Nordstrom (JWN)  is likely to weather the storm facing the department stores for a number of reasons.

"Nordstrom has validated our view that the company represents the best-of-breed in the department store landscape, with an appropriate balance of: (1) exposure to brands with strong consumer demand; (2) emphasis on deep value preference through the Rack concept; (3) appropriate ecommerce investments to leverage faster than peers; and (4) tight inventory management and emphasis on speed to market," Buss wrote to investors.

 

Monster Beverage
Monster Beverage

Name: Monster Beverage

Market Cap: $26.6 billion

Recent Price: $45.76

Price Target: $59

Credit Suisse analyst Laurent Grandet believes Monster Beverage (MNST)  has an attractive profile, due to the rise of energy drinks and its allegiance with Coca Cola (KO) .

"We think the company has exceptionally strong fundamentals, driven by the popularity of energy drinks, especially with Millennial consumers," Grandet wrote to investors. "We expect strong growth to persist and even accelerate for Monster in the coming years as it continues to broaden its range and expand geographically thanks to the Coke distribution system. In our view, the Coke deal unlocks a number of promising growth avenues where Monster was previously weak, including on-premise and international."

21st Century Fox
21st Century Fox

Name: 21st Century Fox 

Market Cap: $59.1 billion

Recent Price: $32.05

Price Target: $37

Credit Suisse analyst Omar Sheikh is bullish on Fox (FOXA) , as he believes the company is worth more than Wall Street is giving it credit for, based on all of its different parts.

"We are bullish on FOXA due to (1) the removal of M&A risk following the proposed acquisition of an additional 61% of Sky; (2) the significant growth opportunity at Hulu and STAR India, two assets we believe are misunderstood by investors; (3) Fox's sports exposure to the NFL and MLB; and (4) Fox's compelling SOTP valuation, where we value FOX shares at $37 based on stakes in Hulu ($1.75bn), STAR India ($8.5bn), Sky ($8.1bn), Shine-Endemol ($1.5bn) and a value for core Fox at 9.5x fiscal 2017 EV/EBITDA, in line with peers," Sheikh wrote to investors.

Hormel Foods
Hormel Foods

Name: Hormel Foods

Market Cap: $18.3 billion

Recent Price: $34.51

Price Target: $41

Credit Suisse analyst Rob Moskow is bullish on Hormel Foods (HRL)  as he believes new product launches and the requisite advertising will drive revenue growth.

"We continue to expect increasing top-line momentum for Hormel driven by increased investment in advertising and new product launches," Moskow wrote to investors. "In addition, management has established a bold target for moving its operating margin from the third to the first quartile of its peer group (currently at 15-19%). The robust growth of the company's value-added product lines, the full pipeline of acquisition opportunities, and the decision to exit the highly commoditized Farmer John business give the company sufficient momentum to achieve its target."

Panera Brands
Panera Brands

Name: Panera Brands

Market Cap: $6.9 billion

Recent Price: $282.63

Price Target: $260

Credit Suisse analyst Jason West has been positive on Panera Brands (PNRA)  because of how well it's run and consumer's perception about the brand.

"Our thesis of accelerating SSS as prior investments gain steam is playing out. For example, PNRA's nascent delivery rollout has the potential to drive ~200bps of SSS uplift in both 2017 and 2018 (assuming ~67% of company stores add delivery by year-end 2018)," West wrote to investors. "The rollout should be dilutive to margins and EPS in 2017, but accretive to EPS beginning in 2018. The combination of P2.0 conversions, delivery, labor investments, upgraded customer analytics, healthy catering sales, and better marketing all provide good visibility on SSS. In the current market, this visibility should earn a premium."

Of course, JAB Holdings is set to acquire Panera.

Home Depot
Home Depot

Name: Home Depot

Market Cap: $176.1 billion

Recent Price: $146.62

Price Target: $154

Credit Suisse analyst Seth Sigman thinks Home Depot (HD) has a strong management team and is operating in "one of the strongest segments in retail," with an abundance of other factors supporting recent strength. 

"We view HD as a best-in-class retailer with a strong management team that participates in one of the strongest segments of retail, marked by oligopoly pricing, reduced supply, and relative insulation from e-commerce," Sigman wrote to investors. "From a macro standpoint, despite the softer Residential Investment (a GDP component) in FY16, we expect this to improve in FY17 and as important, consumer spending remains healthy. Furthermore, our custom Housing Market monitor shows HD's housing market trends remain healthy and are tracking slightly ahead of its guidance of 5% price appreciation." 

Whole Foods Market
Whole Foods Market

Name: Whole Foods Market

Market Cap: $9.5 billion

Recent Price: $29.76

Price Target: $36

Credit Suisse analyst Ed Kelly thinks Whole Foods (WFM) is likely to bounce back after a tough industry backdrop, as it repositions itself for growth.

"Despite the increasingly difficult industry backdrop, we continue to see a unique opportunity to own this leading specialty food retailer in the early stages of its aggressive repositioning strategy," Kelly wrote to investors. "Management is cutting prices, has slowed growth, is accelerating private brand penetration, aggressively reducing costs, enhancing marketing, investing in technology, and streamlining category management (recently announcing a new partnership with Dunnhumby). Though results have been pressured and weakening industry conditions have been a challenge, the risk/reward remains compelling."

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