Spending Is Up, But Faith (In The Economy) Is Down

Spending Is Up, But Faith (In The Economy) Is Down

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While consumer spending reaches multi-year highs, Americans' concern over the economy remains negative.

The Commerce Department numbers are in: Americans' personal spending grew by 1% month over month in April—its fastest rate since August 2009. Consumer spending in March was revised downward to less than 0.1%. That seems great, right? After all, consumer spending contributes significantly to the U.S. economy and has been instrumental in the nation's post-2008 recovery. And consumers are likely to spend more money when they feel positively about the state of their finances and the economy. 

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But last month's impressive 1% growth wasn't purely the result of increased consumer confidence. An uptick in new jobs definitely contributed to the better-than-expected number, but higher gas prices (gas is included in personal spending along with items such as cars and clothing) were also a factor. 

Furthermore, the Commerce Department pointed out a worrying trend in its report: Americans used some savings to pay for their purchases in April, dragging down the savings rate from a four-year-high of 5.9% in March to 5.4%. 

Despite the marked improvement in consumer spending last month, at the moment, the majority of Americans view the economy negatively. According to Gallup's latest Economic Confidence Index, which polled 3,549 U.S. adults between May 9 and May 15, approximately six in 10 Americans believe the economy is worsening. 

The Economic Confidence Index currently stands at -14, which indicates that negative sentiment outweights positive sentiment. Back in early April, the index dropped to -14, a reading last recorded in fall 2014. Gallup notes that the index rose sharply in late 2014/early 2015 thanks to plunging gas prices.  

Gas and jobs play a huge role in shaping consumers' outlook towards the economy. Summer typically means higher demand for gas—and, consequently, higher prices—and the May jobs report (which comes out Friday) is expected to be lackluster in terms of growth. This combination could further dampen Americans' outlook on the economy.

Then again, the 1% increase in consumer spending exceeded the 0.7% forecasted by economists polled by the Wall Street Journal. Which goes to say, consumers can surprise. 

With that in mind, below is a list of U.S.-based consumer goods stocks. Each stock reported postitive quarter-over-quarter sales growth of 10% or greater and is potentially undervalued with a price-to-sales (P/S) ratio of 1 or lower. In addition, each stock has notched a positive performance over the last 12 months.

Will these stocks continue their sales growth as consumer spending rises?

Click on the interactive chart to view data over time. 

1. Acme United Corp. (ACU): Supplies cutting, measuring, first aid, and sharpening products to the school, home, office, hardware, sporting good, and industrial markets in the U.S., Canada, Europe, and Asia. Market cap at $60.37M, most recent closing price at $18.47.

P/S at 0.54.

Quarter-over-quarter sales growth at 11.00%.

Performance over the past year at 4.89%.


2. Coca-Cola Botting Co. Consolidated (COKE): Engages in the production, marketing, and distribution of nonalcoholic beverages, primarily products of The Coca-Cola Company, as well as its own brands. Market cap at $1.16B, most recent closing price at $126.96.

P/S at 0.46.

Quarter-over-quarter sales growth at 38.00%.

Performance over the past year at 12.44%.


3. Golden Enterprises Inc. (GLDC): Produces, markets, and distributes snack products in the U.S. through its subsidiary Golden Flake Snack Foods, Inc. Market cap at $62.10M, most recent closing price at $5.51.

P/S at 0.46.

Quarter-over-quarter sales growth at 11.70%.

Performance over the past year at 39.81%.


4. Lifevantage Corporation (LFVN): Identifies, researches, develops, and distributes nutraceutical dietary supplements and skin care products. Market cap at $180.96M, most recent closing price at $13.52.

P/S at 0.96.

Quarter-over-quarter sales growth at 24.30%.

Performance over the past year at 189.14%.


5. Post Holdings Inc. (POST): Manufactures, markets, and sells branded and private label ready-to-eat cereal products primarily in the U.S. and abroad. Market cap at $4.94B, most recent closing price at $76.70.

P/S at 0.98.

Quarter-over-quarter sales growth at 20.70%.

Performance over the past year at 77.30%.


6. Thor Industries Inc. (THO): Manufactures and sells a range of recreation vehicles and small and mid-size buses, as well as related parts and accessories in the U.S. and Canada. Market cap at $3.42B, most recent closing price at $64.94.

P/S at 0.8.

Quarter-over-quarter sales growth at 14.40%.

Performance over the past year at 8.53%.


(Monthly return data sourced from MOD. All other data sourced from FINVIZ.)

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