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In A Shaky Market, These 3 Consumer Stocks Should Be On Your Radar

In A Shaky Market, These 3 Consumer Stocks Should Be On Your Radar

All 3 offer possible double-digit returns over the next twelve months. Here’s what you need to know about these 3 stocks.

The stock market has been looking dicey for the past month, and lots of big names are sounding the alarm bells that this bull market is on its last legs.

While it may be more fun to look at growth stocks even at frothy valuations, the stocks that have been doing alright over the past few weeks have been safe haven and consumer stocks. And many of these stocks are still trading at cheap valuations.

Some may be yawn inducing but on closer inspection, these stocks offer both possible double-digit upside and safety as the market turns bearish.

Here’s what you should know about these three stocks.

Packaging Corp of America (NYSE: PKG)

Packaging Corp of America (NYSE: PKG) might be boring, but that’s kind of the point. 

PKG is a maker of a range of corrugated packaging products – shipping containers, cardboard boxes, packaging for meats and fruits and vegetables, white and colored papers, etc. You’ve likely held one of their products in your hands and not even known it.

The great thing about PKG is that, no matter the market climate, there will always be demand for its products. And while this company isn’t likely to post monumental earnings growth, it currently has a forward P/E of less than 13, so there’s still some value to be had.

Analysts’ average price target for PKG is $115.70, suggesting possible upside of nearly 21% over the next twelve months.

Hanesbrands (NYSE: HBI)

Hanesbrands (NYSE: HBI) needs no introduction.

The stock was hit hard earlier this year after it dropped a bomb in its Q2 earnings call that retail giant Target (NYSE: TGT) had no plans to renew the contract for Hanesbrands’ C9 by Champion line, gear that is exclusively sold at Target stores, when its current contract ends in 2020. But I think the market has overreacted to this news.

First, the C9 line only generates $380 million in trailing twelve-month (TTM) revenue, or just under 6% of the company’s total TTM revenue. That’s certainly not an insignificant chunk of revenue, but it’s not massive either and the company has two years to figure out how to replace that revenue and you can be sure management is working hard to figure it out.

Second, the news about the C9 line completely overshadowed just how well Hanesbrands is doing globally. The company has reported that its international sales in 2017 were $2.1 billion, representing 32% of total sales. That’s up from just $0.5 billion in sales in 2013, and just 11% of total sales that year. And the company is expected to continue to grow in international markets.

Now, all that isn’t to say that Hanesbrands doesn’t have its issues. The company does need to improve operating margin and make progress on its net debt. But if Hanesbrands is able to show some improvement in these areas, they could prove to be big catalysts for the stock. 

The average analyst price target for HBI is $22.50, indicating potential upside of 36.86% in the next twelve months.

Brunswick (NYSE: BC)

I’ve got a confession to make. I’m a terrible bowler – like, lucky to break above 50 bad. But while I may be one of the world’s worst bowlers, I can still appreciate Brunswick (NYSE: BC) stock.

Brunswick is best known for being the maker of the bowling balls and pins that are found at nearly every bowling alley. However, Brunswick isn’t even in the bowling business anymore and hasn’t been since they sold that business in 2015. The company now is focused solely on making boats, billiard products, and fitness equipment.

And it is good at what it does. So good in fact that even when the economy wasn’t in great shape a few years ago, the company was still seeing growth making this stock an interesting target to keep in mind as the market falters as it may be more likely to do all right when and if the market takes a turn for the worst.

BC currently trades at just 13 times next year’s expected profits, and is down nearly 17% for the month, which may be a good buying opportunity. The average twelve-month price target for BC is $73.08, suggesting possible upside of 36.86%.

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