James Dennin, Kapitall: With consumer sentiment down, we decided to look for well-performing stocks in the consumer goods sector.

You're probably sick of hearing about it by now, but the effects of the government shutdown, not to mention the upcoming debt ceiling debate, continue to ripple through the US economy. While we no longer have access to a lot of the economic data usually relied upon to assess the health of the economy, Thomson Reuters/University of Michigan was still able to release its monthly report on consumer sentiment, which has dropped to its lowest level in nine months.

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But the dip is bolstered, according to Bloomberg, by a resilient job market and growing wealth levels. Otherwise the situation could be much worse, as the market contemplates another Lehman-like market free fall if Congress fails to extend our credit. 

However, value investors know that a bearish market is often the time to buy. And while a crisis is far from averted, there are increasingly positive signs about the battle in Washington. Who knows, maybe a compromise will soon be reached. With that in mind, we decided to search for investment ideas among consumer goods stocks.

Consumer goods, also known as final goods, are products that have reached the end of a production cycle, and are therefore available for purchase from the average consumer. These include everything from cars and cigarettes, to dishwashers and jewelry.

This differs from products like oil, precious metals, or advertising – things that are usually purchased by companies or specialists. Because of its focus on the average consumer, consumer sentiment is usually seen as an important bellwether of how typical Americans are doing.

When sentiment is down, the market usually reacts bearishly. With that in mind, we decided to look for consumer goods stocks that were rated favorably. We screened for stocks that had average ratings of "strong buy." Then we limited our results to those with high dividend yields, the payments that stocks make out to their shareholders, to ensure some income opportunities exist. 

We were left with four stocks, in four different industries providing consumer goods.  

Click on the interactive chart below to see analyst ratings over time. 

Do you invest in consumer goods? Use the list below as a starting point for your own analysis. 

1. Crown Crafts Inc. ( CRWS): Provides infant and toddler products for consumer industry in the United States and internationally. Market cap at $74.08M, most recent closing price at $7.38.

Dividend Yield: 4.34%.
 

 

2. Honda Motor Co., Ltd. ( HMC): Engages in the development, manufacture, and distribution of motorcycles, automobiles, and power products primarily in North America, Europe, and Asia. Market cap at $71.82B, most recent closing price at $40.08.

Dividend Yield: 4.99%.
 

 

3. Coffee Holding Co. ( JVA): Engages in manufacturing, roasting, packaging, marketing, and distributing roasted and blended coffees in the United States and Canada. Market cap at $34.71M, most recent closing price at $5.43.

Dividend Yield: 4.42%.
 

 

4. Orchids Paper Products Company ( TIS): Manufactures private label tissue products for the consumer market in the United States. Market cap at $221.94M, most recent closing price at $27.89.

Dividend Yield: 5.02%.
 

 

 

( List compiled by James Dennin, a Kapitall Writer. Analyst ratings sourced from Zacks Investment Research, market capitalization and closing prices sourced from Yahoo! Finance. All other data sourced from Finviz.)

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