BOSTON ( TheStreet) -- The 2011 Top Picks List from Jefferies includes eight consumer stocks that the bank expects to outperform the broader market. Five of those still offer significant upside, based on projected price targets. Jefferies expects returns of at least 17% and as much as 74% in 2011. Below is a look at the companies' fundamentals and Jefferies' outlook. The stocks are ordered by upside, from ample to mammoth.

5. Walgreen ( WAG) is one of the largest drug store chains in the U.S. Over a three-year span, Walgreen has grown sales 7.5% annually, on average. Its fiscal first-quarter, reported on Dec. 22, exceeded expectations. The company delivered adjusted earnings of 62 cents, exceeding the consensus Wall Street estimate by 15%, helped by an expansion of the operating margin from 5.1% to 5.5%. Walgreen's top-line figure matched the Street's target. The company's stock has been a consistent performer, with 6.2% annualized returns over three years.

Although the stock has rallied an eye-catching 20% in just three months, Jefferies is still bullish on Walgreen. The company has a solid growth trajectory. Its PEG ratio, the trailing P/E divided by analysts' predicted terminal growth rate, of 0.8 signals a 20% discount to fair value. Jefferies is optimistic about the company's December Jingle Cash promotion, expecting a boost in sales and margins. Solid traffic and consumer spending trends confirm the thesis. Although Jefferies has a 12-month target of $48 for Walgreen's stock, its cash-flow model estimates fair value at a lofty $65.

4. Darden Restaurants ( DRI) owns and operates full-service eateries. Darden has been a top-performer in the restaurant space over a three-year span, growing net income 30% annually, on average, as its stock returned 21% annually, on average. Darden owns a number of well-recognized brands, including low-priced chains Red Lobster and Olive Garden as well as high-end steakhouse The Capital Grille. Darden's fiscal second-quarter earnings, announced on Dec. 20, just matched the Wall Street consensus of 54 cents, sending shares down 5.7%.

Darden shares fell more than 1% on Friday as UBS lowered its price target on the stock to $54, though it maintained its "buy" rating. The recent sell-off presents an opportunity to investors. Jefferies remains positive on the stock due to its valuation and same-store-sales growth. Darden's stock fetches a forward P/E of 12 and a cash flow multiple of 7.4, attractive 57% and 52% discounts to restaurant industry averages. Although Darden's stock sold off following its latest quarterly report, Jefferies boosted its price target from $52 to $55 in response to the data, a reassuring sign.

3. Gaylord Entertainment ( GET) is a hospitality company, which owns and operates hotels, resorts and convention centers in the U.S. Although the company's stock has soared 70% in the past 12 months, fundamentals are shaky. Gaylord has suffered GAAP net losses in five consecutive quarters. The company will release fourth-quarter results on Feb. 8. Gaylord's third-quarter net loss more than doubled to $32 million, or 67 cents a share, as revenue fell 21%. The gross margin declined from 39% to 38% and the operating margin fell from positive 3% into negative territory.

Despite apparent weakness, Jefferies was bullish on the quarter, given that Gaylord's core hospitality segment boosted EBITDA 22%, exceeding the researcher's target by 18%. A decrease in cancellations and attrition and higher-than-anticipated EBITDA and RevPAR, or revenue-per-available-room, guidance were also viewed positively. Jefferies, valuing Gaylord on a free-cash-flow basis, has a 12-month price target of $44 for its shares. Other analysts agree, with 12, or 80%, ranking the stock "buy" and three rating it "hold." JPMorgan has a $45 target.

2. Central European Distribution ( CEDC) produces, distributes, imports and exports alcoholic beverages in Poland, Hungary and Russia. The company has a market value of $1.1 billion. In the third quarter, sales dropped 16%, but net income more than doubled to $100 million. Earnings per share climbed a more-modest 18%, restrained by a larger float. Central European's 44% gross margin and 21% operating margin are attractive relative to beverage peers. Furthermore, the stock sells for 12-times forward earnings, a 31% industry discount.

Jefferies expects a buyout, at some point, by a global spirit giant. But, it expects near-term outperformance due to signs of a reviving Russian consumer. On Dec. 2, PepsiCo ( PEP) announced a 66%-stake buy in Russian Wimm-Bill-Dann Foods, helping the outlook for Central European, whose stock responded positively to the announcement. Jefferies values Central European at $32, suggesting a 12-month rise of 39%. Other analysts, 76% of which rate the stock "buy", are also bullish. Citigroup expects a 67% rise to $38. Goldman Sachs has a $32.60 target.

1. Abercrombie & Fitch ( ANF), an American clothing retailer focused on the teen demographic, is Jefferies' top specialty retail pick for 2011. Its stock has soared 55% in 12 months, but is off 16% in the past four weeks. Jefferies' take: "an accelerating US biz, margin stabilization and international sales at a tipping point." Its $85 target, the highest on the Street, suggests a looming gain of 74%. Abercrombie's fiscal third-quarter adjusted earnings of 56 cents, representing 37% year-over-year growth, beat analysts' consensus target by 11%, signaling business momentum.

The gross margin declined from 72% to 70%, dismaying analysts. Jefferies offers a number of positive catalysts to justify its lofty target. It expects the Abercrombie and Hollister, its subsidiary, brands to come back into favor after three years out-of-favor with teens. It also expects international sales to pass $1 billion in 2011 and account for up to 50% of sales in the long-term. Another valuation positive, according to Jefferies, is the $7 of net cash per share. In the third quarter, Abercrombie's cash balance increased 18% to $618 million. Debt expanded to $82 million.

Same-store sales are on the rise and net sales have gained 8.9% in the past 12 months. Although ostensibly pricey, at a forward P/E of 18 and a cash flow multiple of 14, both industry premiums, Abercrombie's stock is quite cheap based on its PEG ratio of 0.3, signaling a discount of up to 70% to long-term growth. With one and two-year same-store sales accelerating and the opportunity to boost prices and regain premium status over similar-style brands, such as American Eagle ( AEO) and Aeropostale ( ARO), Jefferies forecasts 2011 earnings 40% above consensus.

-- Written by Jake Lynch in Boston.

>To see these stocks in action, visit the 5 Consumer Stocks With Upside portfolio on Stockpickr.


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