8 Low-Beta Stocks for a Market Correction

NEW YORK ( TheStreet) -- Calavo Growers ( CVGW), Lifeway Foods ( LWAY), Summer Infant ( SUMR) and Tyson Foods ( TSN) are consumer goods stocks with a beta of less than one, implying that these stocks erode less value during a market correction, and ensure sufficient cushion in a portfolio.

Moreover, these eight low-beta consumer stocks have potential upsides of 3% to 41%. Being analysts' favorites, most of these stocks have no sell ratings.

Here are the stocks ordered by their beta, lowest to highest.

8. Black Diamond ( BDE) develops, manufactures and globally distributes a broad range of products, including rock-climbing equipment (such as carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gear), technical backpacks and high-end day packs, tents, trekking poles, headlamps and lanterns, gloves and mittens, and ski equipment. The stock has a low beta of 0.43

During the first quarter ended March 2011, net sales rose 18% to $39.1 million compared to pro forma sales of $33.1 million in the prior-year quarter. Net income totaled $1.2 million, or 5 cents per share; adjusted net income before non-cash items was $4.4 million, or 20 cents per share; and adjusted EBITDA totaled $4.6 million. Lastly, cash and cash equivalents surged to $5.2 million from $2.8 million at the end of Dec. 2010.

During the quarter, the company successfully completed the integration of Black Diamond Equipment and Gregory Mountain Products.

Of the three analysts covering the stock, 67% recommend a buy, while the remaining rate a hold. There are no sell ratings on the stock. On average, analysts foresee 9% upside to $9 in value from current levels.

7. Motorcar Parts of America ( MPAA) remanufactures alternators and starters for import and domestic cars, light trucks, heavy-duty agricultural and industrial applications. These products are distributed to both the do-it-yourself (DIY) and do-it-for-me (DIFM) markets across the U.S. and Canada. The company is expected to report fourth-quarter and full-year 2011 results on June 14. The stock has a beta of 0.60

Net income for the fourth quarter of 2011 is forecast at $3.3 million on sales of $40.5 million, compared to net income of $2.9 million on $38.6 million sales recorded during 2010 fourth quarter, according to analysts polled by Bloomberg. Earnings per share are pegged at 26 cents, up from 24 cents per share reported during the comparable quarter last year.

Net income for full year 2011 is forecast at $13.1 million on sales of $159 million, compared to net income of $9.7 million on $147.2 million sales recorded during full year 2010, according to analysts polled by Bloomberg. Earnings per share are pegged at $1.09 cents, up from 80 cents per share reported during the previous year.

Of the four analysts covering the stock, 75% recommend a buy and the remaining rate a hold. There are no sell ratings on the stock. On average, analysts estimate 8.8% upside to $17 in value from current levels.

6. McCormick & Company ( MKC) engages in the manufacture, marketing and distribution of spices, seasonings, specialty foods and flavorings to the food industry. Its sales, distribution and production facilities are in North America and Europe. The company operates in two business segments: consumer and industrial. The stock has a beta of 0.60

For the first quarter of 2011, the company reported earnings of $76.8 million, or 57 cents per share, compared to $67.9 million, or 51 cents per share, in the year-ago quarter. Revenue for the period increased 2.4% year-over-year to $782.8 million from $764.5 million, because of pricing action taken in response to increased raw material and packaging material costs. Cash and cash equivalents soared to $40.6 million from $21.9 million in the comparable period of last year.

The company recently announced that it has signed a joint venture agreement with Kohinoor Foods Ltd (KFL) to market and sell its basmati rice and food products in India. The agreement is expected to close later in 2011, subject to regulatory and other approvals in India. McCormick will invest a total of $115 million, which includes an 85% interest in the JV.

Of the 15 analysts covering the stock, 47% recommend a buy and the rest rate a hold. There are no sell ratings on the stock. On average, analysts estimate 5.7% upside to $52.50 in value from current levels.

5. Calavo Growers ( CVGW) procures and markets avocados and other perishable commodities, and prepares and distributes processed avocado products. It offers a range of fresh and processed food products globally to food distributors, producers, wholesalers, supermarkets, and restaurants. The stock has a beta of 0.61

During the first quarter of 2011, net sales rose 36% to $91.3 million from $67.3 million, driven by increased sales of Mexican- and California-sourced avocados. The sales increase was partially offset by decreased sales from Chilean-sourced avocados, pineapples, as well as tomatoes. Net income inched up to $2.31 million from $2.27 million. Earnings per share remained flat at 16 cents.

The company recently signed an acquisition agreement for Renaissance Food Group, a closely-held fresh food company that produces, markets and distributes nationally a portfolio of healthy, premium lifestyle products for consumers via the retail channel. The acquired entity's 2011 revenue is expected to exceed $100 million.

Of the four analysts covering the stock, 50% recommend a buy and the remaining rate it a hold. There are no sell ratings. On average, analysts estimate 32.5% upside to $29 in value from current levels.

4. A.T. Cross Company ( ATX) is a designer and marketer of branded personal accessories, including writing instruments, reading glasses, personal and business accessories and sunglasses. The company operates in two business segments: Cross Accessory Division (CAD) and Cross Optical Group (COG). The stock has a beta of 0.61

For the latest first quarter, the company reported 15.7% growth in revenue to $39.8 million from $34.4 million in the year-ago period, driven by a 10.3% increase in CAD revenue and a 24.1% rise in COG revenue. Moreover, net income surged to $1.3 million, or 10 cents per share, compared to $0.2 million, or 1-cent per share in 2010 first quarter.

In February, the company provided 2011 earnings guidance of 56 cents to 60 cents per share. Given the first quarter results, the company is now guiding revenue to the top end of the range. The company will review the guidance again in July, after the peak sunglass season concludes.

All the analysts covering the stock recommend buying it. There are no sell ratings on the stock. On average, analysts foresee 3% upside to $12.50 from current levels.

3. Lifeway Foods ( LWAY) is engaged in the manufacture of probiotic, cultured, functional dairy and non-dairy health foods. Lifeway's primary product is kefir, a drinkable dairy beverage similar to but distinct from yogurt. The stock has a beta of 0.62

For the first quarter of 2011, the company reported 16.2% growth in revenue to $17.3 million from $14.9 million in the year-ago period, primarily attributable to improved sales and awareness of its flagship line Kefir, as well as ProBugs Organic Kefir for kids. Gross profit margin stood at 42.05%, while operating margin was 18.87%. Net income rose to $1.9 million, or 12 cents per share, as compared to $1.7 million, or 11 cents per share, in 2010 first quarter.

Going forward, the company expects record sales and profitability during fiscal 2011.

Of the three analysts covering the stock, 67% recommend a buy and the rest rate a hold. There are no sell ratings on the stock. On average, analysts estimate 19.8% upside to $12.15 in value from current levels.

2. Summer Infant ( SUMR) is a designer, marketer, and distributor of juvenile health, safety and wellness products, which are sold to North American and U.K. retailers. The company has more than 80 products in various categories including nursery audio/video monitors, safety gates, durable bath products, bed rails, bouncers, and a product line of soft goods/bedding. The stock has a beta of 0.69

During the first quarter of 2011, revenue surged 32.5% to $58.5 million from $44.1 million, driven by gains across most product categories, with particular strength in the furniture segment due to increased crib placements at several retailers. Over 30% growth was realized in the U.S. market as well as through international operations.

Net income for the first quarter of 2011 was $1.2 million, or 7 cents per share, compared to $1.8 million, or 11 cents per share, in the first quarter of 2010. On a non-GAAP basis, excluding $0.8 million of pre-tax charges relating to the video monitor re-labeling and deal fees associated with the BornFree acquisition, adjusted net income was $1.8 million, or 11 cents per diluted share.

Going forward, the company expects full year 2011 revenue to be at least $235 million, up from its earlier estimated $220 million. Diluted earnings per share are projected to be at least 61 cents, excluding deal fees and transition costs.

Of the nine analysts covering the stock, 89% recommend a buy and the remaining rate it a hold. There are no sell ratings on the stock. On average, analysts estimate 40.9% upside to $11.40 in value from current levels.

1. Tyson Foods ( TSN) is a meat protein and food production company. It produces, distributes and markets chicken, beef, pork, prepared foods and allied products. Tyson structures its operations into four segments: chicken, beef, pork, and prepared foods. The stock has a beta of 0.70

For its latest second quarter, earnings remained flat at $159 million, or 42 cents per share, compared to the prior year's second quarter. Revenue for the period soared 15.7% to $8 billion from $6.9 billion as total volumes increased 3% and average sales price rose 12.3%.

"We produced record sales for the second quarter on substantially higher sales prices in addition to increased volume. All segments except Chicken were within or above their normalized operating margin ranges. While Chicken was well below its normalized range, it was profitable, and we believe it will continue to be profitable in the third and fourth quarters. Our Beef segment remains solid, and our Pork segment continues to produce outstanding returns. Prepared Foods is moving in the right direction, and we've got more work to do in this segment," said Donnie Smith, Tyson Foods' president and COO.

The company forecasts 2011 sales to exceed $32 billion, driven by price increases associated with rising raw material costs. Capital expenditure is estimated at approximately $700 million.

Of the 17 analysts covering the stock, 59% recommend a buy, while 35% rate it a hold. On average, analysts estimate an upside of 15.2% to $21.77 from current levels.

>>To see these stocks in action, visit the 8 Low-Beta Stocks for a Market Correction portfolio on Stockpickr.

More from Opinion

Red Hat CFO Tells TheStreet: Tech Trends Are Still in Our Favor

Red Hat CFO Tells TheStreet: Tech Trends Are Still in Our Favor

Throwback Thursday: Intel Edition

Throwback Thursday: Intel Edition

Intel's Next CEO Should Try Harder to Protect Its Flanks Against AMD and Others

Intel's Next CEO Should Try Harder to Protect Its Flanks Against AMD and Others

3 Warren Buffett Stock Picks That Could Be Perfect for Your Retirement Portfolio

3 Warren Buffett Stock Picks That Could Be Perfect for Your Retirement Portfolio

Wednesday Wrap-Up: GE and Facebook

Wednesday Wrap-Up: GE and Facebook