Kalkine Media explores top consumer stocks amid latest inflation figures

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Kalkine Media explores top consumer stocks amid latest inflation figures

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 Kalkine Media explores top consumer stocks amid latest inflation figures
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Highlights:

  • The Labor Department released the CPI report on September 13.
  • Genuine Parts Company (NYSE: GPC) had a dividend yield of 2.2 per cent.
  • The S&P 500 consumer discretionary sector added about 20 per cent QTD.

There are plenty of consumer services companies in the United States, and some of them are Genuine Parts Company (NYSE: GPC), Ulta Beauty, Inc. (NASDAQ: ULTA), Dollar General Corporation (NYSE: DG), AutoZone, Inc. (NYSE: AZO), and Dollar Tree Inc. (NASDAQ: DLTR). The stocks of these companies have maintained a steady momentum, given the surge in their price, amid volatile trading so far this year.

After remaining constant in July, the inflation rate for all urban consumers increased by 0.1 per cent on a seasonally adjusted basis in August, said the Bureau of Labor Statistics. Before seasonal adjustment, all items index rose 8.3 per cent during the previous 12 months.

As the inflation data has been released, consumer stocks could be on the investors' radar. Here Kalkine Media® explores the top consumer stocks for investors looking to diversify their portfolio in the segment.

Genuine Parts Company (NYSE: GPC)

Genuine Parts is a service firm specialising in automotive replacement parts, office products, and other related materials. The US$ 23.17 billion market cap company holds a dividend yield of 2.2 per cent.

The GPC stock had a P/E ratio of 21.2. Meanwhile, the firm's stock touched its 52-week high of US$ 163.5 on Friday, September 9. It had an RSI of about 72, according to Refinitiv data, suggesting that the stock could be in an oversold condition. RSI between 70 to 100 indicates an oversold condition of the stock.

The GPC stock returned gains of over 18 per cent in the running year while climbing over 37 per cent in the last 12 months. It soared nearly 23 per cent QTD.

The Atlanta, Georgia-based firm reported total sales of US$ 5.6 billion in the latest quarter, implying a 17.1 per cent YoY jump from US$ 4.8 billion in Q2 FY21. Genuine Parts posted a net income of US$ 373 million in the fiscal 2022 second quarter, significantly up from US$ 196 million in the fiscal 2021 second quarter.

The firm had also lifted its total sales growth guidance to be in the range of 12 per cent to 14 per cent, from its prior guidance range of ten per cent to 12 per cent.

Meanwhile, the company announced a regular quarterly cash dividend of US$ 0.895 apiece on its common stock on August 15, which would be payable on October 3 this year.

Ulta Beauty, Inc. (NASDAQ: ULTA)

Ulta Beauty is a Nasdaq-listed beauty salon that operates a chain of beauty stores. The beauty retailer holds a market cap of US$ 23.14 billion.

The ULTA stock climbed up more than eight per cent YTD while soaring nearly 16 per cent in the current quarter. It also showed gains of about 19 per cent YoY. Notably, it touched its 52-week high of 448.29 on September 8, 2022.

The Bolingbrook, Illinois-based company's total sales were US$ 2.3 billion in the latest quarter, up by 16.8 per cent from US$ 2 billion in the prior year's Q2. Its net sales jumped 18.9 per cent YoY for the two quarters to US$ 4.6 billion.

It also witnessed a growth in its net income in the last quarter as it jumped by 17.8 per cent YoY to US$ 295.7 million in Q2 FY22.

The beauty retailer now expects its net sales to be between US$ 9.65 billion and US$ 9.75 billion in fiscal 2022, up from its prior guidance range of US$ 9.35 billion to US$ 9.55 billion.

Dollar General Corporation (NYSE: DG)

Dollar General is a variety store company with a market cap of over US$ 56.23 billion. The DG stock increased by about five per cent YTD, while the increase was over 13 per cent YoY.

The net sales of the Goodlettsville, Tennessee-based company increased by nine per cent YoY to US$ 9.4 billion in Q2 FY22. Its net income totalled US$ 678 million in the second quarter of FY22, an increase of 6.4 per cent YoY.

Dollar General now expects its net sales growth to be about 11 per cent, up from its prior guidance range of ten per cent to 10.5 per cent.

Top consumer stocks to explore after inflation dataSource: ©Kalkine Media®; © Canva Creative Studio via Canva.com

AutoZone, Inc. (NYSE: AZO)

AutoZone is an automotive parts and other accessories retailer with a market cap of over US$ 43.19 billion. The AZO stock added over five per cent YTD and 42 per cent YoY. In the third quarter, it so far gained over three per cent.

The firm will announce its fourth quarter and full-year earnings on September 19, 2022. Meanwhile, in the third quarter of fiscal 2022, its net sales rose 5.9 per cent YoY to US$ 3.9 billion.

The net income of AutoZone was US$ 592.57 million in Q3 FY22, a decline from US$ 596.16 million in Q3 FY21.

Dollar Tree Inc. (NASDAQ: DLTR)

Dollar Tree is one of the major discount variety store operators. The DLTR stock gained more than 61 per cent YoY and about three per cent YTD. However, in Q3, it slumped more than six per cent.

The stock of the discount store operator had an RSI of about 40. According to some analysts, the RSI range of 30-50 indicates a highly volatile stock condition.

The consolidated total sales of Dollar Tree rose 6.7 per cent to US$ 6.77 billion in Q2 FY22. The net income of the Chesapeake, Virginia-based company also jumped 27.4 per cent YoY to US$ 359.9 million in the latest quarter.

Bottom line

Consumer spending has cooled off lately due to the higher rates, inflation woes, and other macroeconomic headwinds. In addition, it is no secret that the consumer sector was one of the worst-hit segments of the market this year due to the uncertainties in the market.

The slowing economic condition in the US and on a global scale also spurred fears of a potential recession. Plus, the Fed's aggressive tightening of its monetary support also boosted possibilities over it.

However, despite the turbulence in the broader market, some companies have still managed to maintain a steady momentum. But the picture of the broader market remained different.

The S&P 500 consumer defensive segment fell over four per cent this year. However, it managed to stay in the green in the current quarter and on a YoY basis. It showed growth of over two per cent in this quarter.

The S&P 500 consumer discretionary sector lost nearly 20 per cent YTD while falling over 12 per cent YoY. However, in the ongoing quarter, it added nearly 20 per cent.

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