3 Consumer Stock Picks For 2016

As 2016 is quickly approaching, investors will surely be taking a look at their portfolios to both view their results from 2015, and to make sure they are positioned well for the upcoming year.

Based on economic and market-related data, it seems as though 2016 will be the year of the individual stock-picking investor, which puts an even greater importance on picking the right stocks in order to enjoy a year of solid returns.

The improving U.S. economy has improved over the past year, and is poised for wage growth in 2016. This will likely give consumers more money to spend, which will strengthen the overall economy. A sector that should see an increase in performance will be the Consumer Discretionary Sector.

Below are three top ranked stocks from the Consumer Discretionary Sector that are in great positions to reap the benefits of an improving U.S. economy and an increasingly richer consumer.

Dean Foods Company

Dean Foods Company (DF - Analyst Report) is one stock in the space that could deliver a solid performance in the coming year. As the nation’s leading processor and distributor of fresh milk and other dairy products, and a Zacks Rank #1 (Strong Buy) stock, it certainly is a stock to consider. It’s important to note that the dairy products industry is currently one of the top ranked by Zacks, falling in the top 2% of all industries, and offers a solid dividend payment of 1.59%.

Analysts seem to be bullish on this stock for the coming year, as there has been recent positive estimate revision activity. For 2016, there have been five upward revisions in the last 60 days, and the Zacks Consensus EPS Estimate has jumped up to $1.23, much higher than the estimate of $1.03 just 60 days ago.

The estimate revision activity also implies that the first quarter should be a strong one for the company. There have been three upward revisions for the quarter ending 3/2016. While Dean Foods is down about 8% year-to-date in 2015, the company is poised for a much better showing in the New Year.

Campbell Soup Company

Another top pick from the sector is the Campbell Soup Company (CPB - Analyst Report). The popular chicken noodle soup maker, mostly remembered as your favorite childhood cold remedy for this time of year, holds a Zacks Rank #1 (Strong Buy), and offers an appetizing dividend of 2.33%. The company’s stock has had a solid run in 2015, up almost 23% year-to-date, and Campbell is hoping for more of the same in the upcoming year.

There has been a substantial amount of positive estimate revision activity for this stock as well, with nine analysts increasing their estimate revisions for 2016 in the last 60 days. This activity has led the Zacks Consensus EPS Estimate to jump from $2.60 60 days ago to the current estimate of $2.81.

On another note, even though the company saw solid growth in the past year, it still holds a B for its Zacks Growth Style Score, and it is easy to see why. Campbell has projected EPS growth of 14.09% for the upcoming year, as well as a net margin of 8.11% and a return on equity figure of 56.55%. Both figures are above industry averages and bode well for the high quality convenience food product producer.

Omega Protein Corporation

Lastly, but certainly not least, there is the Omega Protein Corporation (OME - Snapshot Report),  which develops, produces, and delivers healthy products to enhance the nutritional integrity of foods, dietary supplements, and animals feeds worldwide. Another Zacks Rank #1 (Strong Buy) stock, Omega Protein is up almost 115% year-to-date, and is heading into the New Year with a great deal of momentum.

In addition to a top Zacks Rank, Omega Protein also has two solid Style Scores behind it. The company has an A for its Growth Style Score, with projected sales growth of 25.03%, and a 12.59% return on equity figure. Omega Protein’s stock also offers solid value as it holds a B for its Value Style Score. This can be attributed to solid figures like a Price to Equity ratio of 13.70, which comes in below the industry average.

Analyst estimate revision has been positive for Omega Protein, with two upward revisions for 2016 coming in the last 60 days. The Zacks Consensus EPS Estimate has also moved upward significantly in this time period, from $1.54 to the current estimate of $1.73.

Bottom Line

With a U.S. economy that continues to improve giving consumers more to spend in 2016, the year holds great potential for those companies whose business are centered around consumer spending. The 3 stocks listed above hold top ranks from Zacks and are creating a buzz among analysts that make them stocks to consider for the upcoming year for investors looking to profit.

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