Consumer Stocks: 6 Outperformers With Upside

NEW YORK ( TheStreet) -- Tyson Foods ( TSN), Green Mountain Coffee Roasters ( GMCR), Deckers Outdoor ( DECK), Phillips-Van Heusen ( PVH), HanesBrands ( HBI) and Nike ( NKE) have outperformed the broader indices and have upside potential of up to 46% over the next year.

These six consumer stocks have market capitalizations of up to $2.5 billion and the potential to deliver attractive returns. They returned an average 59% in the last year, while the Dow returned around 4.8%. These six have strong buy rating of 63%-85%.

6. Green Mountain Coffee Roasters engages in the specialty coffee and coffee-maker businesses. The company has presence across segments like the specialty coffee business unit and Keurig.

For the third quarter of fiscal 2011, revenue jumped 127% year-over-year to $717 million. Around 82% of consolidated net sales in the second quarter came from the Keurig business unit.

Lawrence J. Blanford, president and CEO, said in a press statement: "In addition to continued strong consumer adoption of the Keurig Single-Cup Brewing system, we believe our third quarter benefitted from our first-ever significant spring advertising and brand support programs, designed to raise awareness of the Keurig Single-Cup Brewing system and of our Brew Over Ice¿ Teas and Coffees, perfect for the summer months."

The company's gross profit margin improved to 36.8% from 34.4% in the corresponding quarter of fiscal 2010 on a shift in sales mix. Net income increased to $56.7 million, up three times from the third quarter of fiscal 2010.

The stock has outperformed the Dow, increasing 207% during the last year. The stock has 73% buy ratings and estimated upside of 10% in the next year.

5. Nike engages in the manufacture of athletic footwear, apparel, equipment and accessories.

Net income for the fourth quarter of fiscal 2011 was $594 million, an increase of 14% from the same quarter last year. Gross margins stood at 44.3% during the quarter.

Nike reported revenue growth of 14% year-over-year, to $5.8 billion in the fourth quarter of fiscal 2011. The top-line punch came from North America, its biggest market, accounting for more than one-third of sales. Future orders scheduled for delivery from June through November 2011 is healthy, and estimated at $10.3 billion, 15% higher than reported for the corresponding period of 2010.

Cash and other investments at the end of the quarter stood at $4.5 billion, up 12% from last year. During the quarter, the company repurchased 7.5 million shares worth $607 million from its shareholders. The stock has outperformed the Dow, increasing 11% during the last year. The stock is trading at 17.8 times its estimated 2011 earnings and analysts expect an upside of 15% over the next year.

4. Deckers Outdoor designs, produces, markets and brand manages footwear and accessories.

Net revenue for the second quarter of 2011 increased 12.5% year-over-year, to $154 million, compared to $156 million in the same period last year. Gross margin was 43%.

Based on strong second-quarter results, the company is raising its full-year guidance. Deckers expects sales to increase by 26% during 2011 from the earlier guidance of 21%, while earnings per share are seen increasing by 17% from the previous view of 13%. The company has pegged its 2011 operating profit margin at 50% to 51%.

Resumption of distribution rights in key geographies, diversified merchandise offering, accelerating retail store openings and acquisition of Sanuk(R) brand would boost business growth, going forward. Deckers' stock rose 111% in the last year and analysts are positive on the stock. It is trading at 20.3 times its estimated 2011 earnings, with upside of 15%. The stock has buy ratings of 80%.

3. Phillips-Van Heusen is an apparel company, owning and marketing the iconic Calvin Klein and Tommy Hilfiger brands worldwide.

For 2011 second quarter, the company reported earnings per share of $1.07, up 39% from the same quarter in the prior year.

The company's Hilfiger and Klein brands drive strong revenue and earnings momentum. Total revenue for the second quarter was $1.33 billion, increasing 21% from the same period last year.

Phillips has revised its annual revenue guidance upward, to between $5.78 billion and $5.82 billion, and annual EPS to reach $5 to $5.12.

The stock has appreciated 8% during the last year and is expected to deliver 28% upside over the next year. It is currently trading at 10.8 times its 2011 estimated earnings, with 85% buy ratings.

2. Tyson Foods deals with meat products like chicken and pork throughout the U.S. and more than 100 countries worldwide.

During the 2011 June quarter, net revenue improved 11% to $8.2 billion, while operating margin was 3.8%.

Going ahead, Donnie Smith, CEO of Tyson Foods, said in a press statement, "My outlook for Tyson Foods remains positive. Our diversified business model, including our outstanding beef and pork segments, along with our strong balance sheet, will allow us to continue serving our customers through insights and innovations as we help them succeed in this economic environment, reinvesting in our business and buying back stock."

Management expects full-year sales to exceed $32 billion, driven by price increases. Tyson expects to improve its profitability following lower net interest expense of $235 million during fiscal 2011, down $100 million compared to fiscal 2010. For fiscal 2012, management expects interest costs of $200 million. The stock will likely appreciate 31% over the next year and is trading at 8.5 times its estimated 2011 earnings. It has delivered 6% in the last year.

1. Hanes Brands is a consumer goods company with a portfolio of apparel brands including Hanes, Champion, Playtex and Bali.

Revenue increased 14% year-over-year to $1.23 billion during the second quarter of 2011, driven by strong performance of the acquired Gear For Sports business and international growth. Earnings per share stood at 87 cents, the same as in the comparative prior-year quarter.

On the business performance, Richard A. Noll, Hanes' CEO, said in a press statement, "Our brand strength, international expansion and acquisition contributions have driven six consecutive quarters of accelerating sales growth. We are leveraging this sales growth with our low-cost global supply chain and tight control of selling, general and administrative costs."

The company has raised its top-line and bottom-line guidance for 2011 after reporting strong first-quarter results. Hanes expects double-digit growth with projected net sales of around $4.9 billion to $5 billion and EPS in the range of $2.7 to $2.9. With 64% buy ratings and upside potential of 46%, the stock looks like a good bet over the next year. It is trading at 9.5 times its estimated 2011 earnings. The stock has delivered 8% in the last year.

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