5 Worst Consumer Stocks May Be Stars in 2012
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(Updated for comment on consumer sentiment.)

NEW YORK ( TheStreet) -- This has been a profitable year to invest in consumer-goods stocks and 2012 may be too, at least for those that have been beaten down.

Consumer-goods shares have generated the second-best returns in the S&P 500 Index this year, rising 11%. Apparel company VF Corp. ( VFC), which owns the North Face and Lee brands, is the top gainer at 65%. Tobacco companies and food producers also led the benchmark index.

Household-goods and home-construction companies were the poorest performers, increasing only 3%, in line with the broader S&P 500. That's because of the slump in the real estate market. In fact, the biggest laggard in the index was Whirlpool ( WHR), the maker of refrigerators, and washer and dryers.

The five worst-performing consumer-goods stocks this year are listed below. For some, losses this year have made them attractive, bringing their valuations to historical lows. But, for others, accounting concerns, housing market trends and the global slowdown prevent them from being good investments in 2012.

Consumer sentiment is improving in the U.S., a good sign for many consumer stocks. Today the University of Michigan's consumer sentiment index for December came in at 67.7, well ahead of estimates.

5. Molson Coors Brewing Co. ( TAP) Company Profile: A brewer that produces Coors Light, Molson Canadian and Carling. 2011 Stock Performance: minus 15.2%

What Went Wrong: High unemployment among core beer consumers, a slowdown in the U.K. (a key market) and commodity inflation. And also an industry trend toward craft beers, wines and spirits.

Is It Worth Owning in 2012? Forty percent of analysts recommend buying Molson Coors, and none has a "sell" rating. Its cheap multiple (11) prices in Armageddon. With a dividend yield of 3% and consistent cash flows, this is a beaten-down stock worth owning in 2012.

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4. Hasbro ( HAS) Company Profile: Hasbro is one of the world's largest toy makers, with Transformers and Nerf products in its stable. 2011 Stock Performance: minus 19.1%

What Went Wrong: Hasbro had a spotless record of meeting and beating analysts' earnings estimates over the past four years -- until 2011. The company has now posted three back-to-back quarterly misses so far. Since results first trailed estimates in April, the stock began to underperform its closest competitor, Barbie maker Mattel ( MAT).

While Hasbro has done well in the boys department, the company seems to be losing market share to Mattel among girls.

Is It Worth Owning in 2012? A blockbuster holiday toy lineup makes the decline in the stock look like an attractive entry point. The company also is expected to benefit in 2012 from the re-release of Star Wars Episode 1: The Phantom Menace in 3D, The Avengers and Spider-Man. I would buy this stock into 2012.

3. Ford ( F) Company Profile: Second-largest carmaker in the U.S. 2011 Stock Performance: minus 34.2%

What Went Wrong: Ford is, most recently, best known as the car company that avoided a government bailout. But with General Motors and Chrysler emerging from bankruptcy, competition has returned. Hyundai, which makes the Hyundai and Kia brands in the U.S., continues to take market share. In addition, a big earnings miss in the first quarter, unstable commodity costs and worries over a recession in Europe and the U.S. have dragged down the stock.

Is It Worth Owning in 2012? Continued uncertainty in Europe will weigh on the stock, as will the succession plan for CEO Alan Mulally, who is expected to retire within two years. The dividend was finally reinstated yesterday, with about a 2% yield.

The company has a strong balance sheet that it's managing well. New hybrid model introductions are planned in 2012, though fires breaking out in the Chevy Volt, an electric car, may hurt consumer demand for those types of cars. I would remain on the sidelines for this one until there are signs of stronger global growth.

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2. Avon Products ( AVP) Company Profile: Avon makes beauty, fashion and home products. 2011 Stock Performance: minus 39.1%

What Went Wrong: A weak U.S. market, missteps in emerging markets, investigations by the Securities and Exchange Commission and having to borrow money to pay the annual dividend haven't been favorable to Avon's stock. Management was reshuffled earlier this year, and a new chief financial officer was appointed, but those changes have yet to make a difference in the shares.

Is It Worth Owning in 2012? The stock is trading at a low multiple, about 10, about a third of where Estee Lauder ( EL) is trading. But despite the value and a strong brand name, I suggest staying away from this one. Given the weakness in emerging markets, the accounting concerns and international bribery claims, this could be a tough one to turn around in 2012.

1. Whirlpool ( WHR) Company Profile: Whirlpool makes refrigerators, washers, dryers and other household appliances. 2011 Stock Performance: minus 43.1%

What Went Wrong: Weaker demand globally, including in emerging markets, has severely damaged Whirlpool's profitability. The company raised prices to help offset inflation in material costs, which put pressure on sales. As a result, Whirlpool announced an aggressive restructuring plan with third-quarter results that calls for 5,000 job cuts and a $500 million restructuring charge.

Is It Worth Owning in 2012? The 3.5% dividend yield is enticing, though it could be cut. With a housing market that remains limp, demand for Whirlpool appliances will continue to languish. Stay away from this stock until the housing market shows signs of improvement.

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>>To see these stocks in action, visit the 5 Worst Consumer Stocks That May Be Stars in 2012 portfolio on Stockpickr.

-- Written by Lindsey Bell in New York.

>To follow the writer on Twitter, go to Lindsey Bell.

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