3 Profitable Consumer Goods Stocks Soaring Past Shaky Consumer Confidence

Mary Lynn Cesar, Kapitall: Can consumer goods stocks survive a dip in consumer confidence? Consider the list below.

Tuesday saw the release of two major consumer economic indicators, painting an interesting picture of the US economy.

The Department of Commerce’s September Advance Monthly Sales for Retail and Food Service figures (PDF) showed $379.5 billion in retail sales last month, which is 0.2% lower than August’s numbers but 3.1% higher than those reported in September 2012. 

Read more from Kapitall on this topic: 4 Consumer Goods Stocks Looking Strong as Confidence Slips

Sales increased in most business categories, with grocery stores posting the biggest gain at 1.0%. On the other hand, auto dealers, clothing retailers, and department stores all experienced declines in purchases, with auto dealers leading the group with a 2.4% drop.

Click on the interactive chart to see analyst ratings over time for the stocks in our list:

A bleaker indicator turned out to be the Conference Board’s October Consumer Confidence survey, providing the index’s weakest reading in six months. Consumer confidence fell to 71.2 in October, down from September’s 80.2 reading in the index’s biggest tumble since August 2011.

Read more about consumer confidence: 4 Consumer Goods Stocks Looking Strong as Confidence Slips

The Conference Board attributed the downward shift to the government shutdown and debt ceiling debacle, stating that wavering consumer confidence will remain an issue in the near future due to the temporary debt ceiling fix.

Under the current law, the debt ceiling is suspended until February 7, allowing the Treasury Department to issue as much debt as necessary until then. After that, the ceiling will be reinstated and Congress will once face a debt ceiling debate.

Investment ideas

The Conference Board expects consumer confidence to be volatile over the coming months due to the short-term nature of the debt ceiling deal. Given the relationship between an inefficient Congress and consumer confidence, we decided to look for investment opportunities among consumer goods stocks, specifically looking for companies with strong indicators of financial health and efficient management.

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