A weaker-than-expected employment report, rising inflationary pressure, and concerns surrounding global supply chain issues continue to drive wild swings in the stock market. Also, the market will likely see more volatility going forward because the Fed is expected to tighten its monetary policy. Against the backdrop, shares of consumer defensive companies, which benefit from relatively inelastic demand for their products, could offer stable returns.
Moreover, despite a surge in inflation, U.S. consumer spending rose 0.8% in August as COVID-19 cases declined. This should bode well for consumer defensive stocks.
So, we think it could be wise to bet on quality stocks from this space USANA Health Sciences, Inc. (USNA), Nature’s Sunshine Products, Inc. (NATR), and LifeVantage Corporation (LFVN), which appear undervalued at their current price levels.
USANA Health Sciences, Inc. (USNA)
USNA creates science-based nutritional and personal care products. The company’s products include USANA nutritional optimizers, CellSentials, probiotic food supplements, and personal care. It also provides Celavive, a skincare regimen, and other products for prenatal, infant, and young child age groups. USNA is headquartered in Salt Lake City, Utah
In July, USNA partnered with the national governing body for skateboarding in the United States and became the official “Nutritional Supplement Supplier” of USA Skateboarding (USAS). USNA will provide supplements to the athletes. This should strengthen the company’s position in the market.
USNA’s net sales increased 30.1% year-over-year to $336.84 million in its second fiscal quarter, ended July 3, 2021. The company’s gross profit grew 32.4% from its year-ago value to $279.82 million. Its earnings from operations rose 35.7% from the prior-year quarter to $53.72 million. Also, the company’s net earnings have increased 36.7% year-over-year to $38.23 million.
Analysts expect USNA’s revenue for its fiscal year 2021 to be $1.19 billion, representing 5% growth year-over-year. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. Its EPS is expected to grow 6.6% next year.
In terms of forward EV/Sales, USNA is currently trading at 1.37x, which is 30.3% lower than the 1.97x industry average. In terms of its forward EV/EBITDA, the stock is currently trading at 8.79x, which is 28.2% lower than the 12.24x industry average. USNA’s stock price has surged more than 20% over the past nine months and roughly 25% over the past year.
USNA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an A grade for Quality and Value, and a B for Stability. We’ve also graded USNA for Sentiment, Growth, and Momentum. Click here to access all USNA’s ratings.
USNA is ranked #3 of 13 stocks in the B-rated Medical – Consumer Goods industry.
Nature’s Sunshine Products, Inc. (NATR)
NATR in Lehi, Utah, is a natural health and wellness company that provides nutritional and personal care products. The company offers its products under the Nature’s Sunshine and Synergy Worldwide brands, which include immune, cardiovascular, digestive, weight management, and other general health products.
Last month, NATR launched its new clean beauty line, “I’amara.” This collection will help the company offer customers naturally derived probiotics with a blend of antioxidants and skin-nourishing nutrients.
During the second quarter, ended June 30, 2021, NATR’s net sales increased 24.9% year-over-year to $108.98 million. The company’s gross profit grew 25.3% from its year-ago value to $80.52 million. Its operating income rose 43.7% from the prior-year quarter to $9.49 million. And the company’s net income increased 10.8% year-over-year to $6.79 million.
In terms of trailing-12-months EV/Sales, NATR is currently trading at 0.59x, which is 70.8% lower than the 2.02x industry average. In terms of its trailing-12-months Price/Sales, the stock is currently trading at 0.73x, which is 50.6% lower than the 1.49x industry average. NATR’s stock price has surged close to 27% over the past year.
NATR’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. Also, the stock has an A grade for Value and Quality and a B for Growth.
In addition to the POWR Rating grades I’ve just highlighted, one can see NATR’s ratings for Stability, Momentum, and Sentiment here. The stock is ranked #1 in the Medical – Consumer Goods industry.
LifeVantage Corporation (LFVN)
LFVN is a health and wellness company that provides anti-aging, energy, gut health, weight management, and other personal care products. The Sandy, Utah, company offers products under Protandim Nrf2 synergizer, Protandim NRF1 synergizer, LifeVantage TrueScience, Petandim for dogs, and Axio brands.
LFVN’s net income increased 28.3% year-over-year to $4.91 million for its fiscal fourth quarter, ended June 30, 2021. The company’s operating income grew 6% from its year-ago value to $6.58 million. Its net revenue came in at $54.78 million, and its gross profit amounted to $45 million during this period.
For its fiscal year 2022, analysts expect LFVN’s revenue to be $225 million, representing 2.2% year-over-year growth. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. In addition, its EPS is expected to increase 11.8% next year.
In terms of trailing-12-months EV/Sales, LFVN is currently trading at 0.39x, which is 80.7% lower than the 2.02x industry average. In terms of its trailing-12-months Price/Sales, the stock is currently trading at 0.43x, which is 70.8% lower than the 1.49x industry average. LFVN’s stock price has increased marginally over the past three months.
It’s no surprise that LFVN has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has an A grade for Value and Quality, and a B grade for Sentiment.
Click here to see the additional POWR Ratings for LFVN (Momentum, Stability, and Growth). In the Medical – Consumer Goods industry, LFVN is ranked #2.
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USNA shares were trading at $97.00 per share on Wednesday morning, up $0.17 (+0.18%). Year-to-date, USNA has gained 25.81%, versus a 17.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
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