Consumer spending increased steadily in April, with consumers increasing their purchases at online shops and spending more at restaurants and bars, indicating resilience in the face of mounting headwinds. In April 2023, retail sales in the United States rose by 0.4%.
So, investors looking for quality consumer stocks can consider buying ACCO Brands Corporation (ACCO) and United-Guardian, Inc. (UG).
Experts believe consumer spending will support the economy despite the rising risks of a recession. “Today’s report should help reassure markets that consumer spending is not about to contract and will instead support at least modest continued economic growth,” said Andrew Hollenhorst, chief U.S. economist at Citigroup in New York.
On the other hand, demand for personal luxury goods is driving expansion in the worldwide speciality consumer products business. The specialty consumer products market is expected to be worth $386.73 billion by 2027, growing at a significant annual growth rate of 5.2% during the forecast period.
In addition, the consumer-packaged goods market is expected to grow at a CAGR of 3.5% until 2030.
Investors’ interest in consumer goods stocks is evident from the iShares U.S. Consumer Goods ETF’s (IYK) 4.7% returns over the past three months and 2.8% over the past six months.
Let’s delve deeper into the fundamentals of the stocks.
ACCO Brands Corporation (ACCO)
ACCO designs, manufactures, and markets consumer, school, technology, and office products. It operates through three segments: ACCO Brands North America; ACCO Brands EMEA; and ACCO Brands International.
ACCO’s forward EV/Sales multiple of 0.81 is 49% lower than the industry average of 1.59. Its forward Price/Sales multiple of 0.26 is 79.8% lower than the industry average of 1.28.
ACCO’s has paid dividends for three consecutive years. Over the last three years, ACCO’s dividend payouts have grown at 6.3% CAGR. While ACCO’s four-year average dividend yield is 3.77%, its current dividend translates to a 5.78% yield.
ACCO’s total operating costs and expenses decreased 3.2% year-over-year to $109.20 million for the fiscal first quarter that ended March 31, 2023. The company’s operating income increased 48.5% year-over-year to $10.10 million.
Also, its total current assets came in at $894.60 million for the first quarter that ended March 31, 2023, compared to $882.30 million for the period that ended December 31, 2022. Also, its total current liabilities came in at $504.40 million, compared to $589 million for the same period.
Analysts expect ACCO’s revenue to increase 2.6% year-over-year to $1.96 billion in 2024. Its EPS is expected to grow 21.9% year-over-year to $1.35 in 2024. The stock has gained 2% over the past month to close its last trading session at $5.19.
ACCO’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ACCO has a B grade for Value and Sentiment. Within the Consumer Goods industry, it is ranked #18 out of 53 stocks. Click here for the additional POWR Ratings for Growth, Momentum, Stability, and Quality for ACCO.
United-Guardian, Inc. (UG)
UG manufactures and markets cosmetic ingredients, pharmaceuticals, medical lubricants, and proprietary specialty industrial products in the United States and internationally.
UG’s trailing-12-month EV/EBITDA multiple of 10.45 is 24.6% lower than the industry average of 13.86. Its trailing-12-month EV/EBIT multiple of 10.87 is 42.6% lower than the industry average of 18.93.
While UG’s four-year average dividend yield is 6.26%, its current dividend translates to a 6.61% yield.
For the first quarter that ended March 31, 2023, UG’s total costs and expenses decreased 27.2% year-over-year to $1.74 million. Its total current assets came in at $11.24 million for the period that ended March 31, 2023, compared to $9.97 million for the period that ended December 31, 2022.
Also, its total assets came in at $11.94 million, compared to $10.64 million for the same period.
UG’s shares have gained marginally over the past month to close the last trading session at $9.38.
UG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It is ranked #7 in the same industry. It has an A grade for Quality and a B for Sentiment. To see additional UG’s rating for Growth, Stability, Value, and Momentum, click here.
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ACCO shares were trading at $5.25 per share on Wednesday morning, up $0.06 (+1.16%). Year-to-date, ACCO has declined -4.77%, versus a 8.16% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...
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