Consumer Products

Deep Value Stocks in Consumer Goods (AVY, BMS, DF, JCI, KFT, LEG, NWL, PVH, RKT, SEE, XRX)

24/7 Wall St. has been conducting reviews looking for value stocks now that the market has softened.  Looking solely for “cheap stocks” on book value is very incomplete, so we have taken earnings growth, dividends, return on equity, and analyst data to create more of a complete review on these companies.  Consumer Goods is perhaps a very broad sector which could easily be broken into many more sub-sectors, but we identified 11 companies with standout price to book values.

In alphabetical order of their ticker symbols:  Avery Dennison Corporation (NYSE: AVY); Bemis Company, Inc. (NYSE: BMS); Dean Foods Co. (NYSE: DF); Johnson Controls Inc. (NYSE: JCI); Kraft Foods Inc. (NYSE:  KFT); Leggett & Platt, Incorporated (NYSE: LEG); Newell Rubbermaid Inc. (NYSE: NWL); Phillips-Van Heusen Corp. (NYSE: PVH); Rock-Tenn Co. (NYSE: RKT); Sealed Air Corporation (NYSE: SEE); and, Xerox Corp. (NYSE: XRX).

Price to book values range from Xerox’s 1.1 to Johnson Controls’ 2.4.  Even though we identified these companies in searching for attractive price to book values, every one of them offers respectable next-year earnings growth.  Analysts expect next-year earnings expansion ranging from Newell Rubbermaid’s 10.6% to Rock-Tenn’s 39%.  All sport forward PE multiples below 14.   Forward PE’s range from Xerox Corp’s 8.1 to Kraft Foods’ 13.9.

Seven of the eleven companies boast an implied upside price expansion exceeding 20%, based on current share prices versus consensus price targets. Leggett & Platt, Newell Rubbermaid, Xerox and Johnson Controls lead the rest with implied price expansions ranging from more than 27% to close to 31%.  Each of these eleven companies has an average daily trading volume exceeding 750,000 shares. Except where otherwise noted, the source for all performance and financial data is Finviz.com.

Avery Dennison Corporation (NYSE: AVY) has a price to book value near 2.3  to 1.  The company’s market cap is just less than $4 billion giving it a middle-of-the-pack rank among these companies.  Its forward PE is about 10.2.  With a consensus target price of $46.71, the shares have an implied upside exceeding 25%.  Shares of Avery Dennison closed Friday at $37.19, down 1.56%.  The 52-week price range is $30.54 to $43.26.  This outfit that makes labels and other office products recently took a downgrade to “Neutral” at Bank of America Merrill Lynch.  It pays a nice dividend with a yield of close to 2.7% and shares were above $60 back in 2007 before the recession.

Bemis Company, Inc. (NYSE: BMS) has a price to book value of 1.8  to 1.  The company’s market cap is just less than $3.4 billion.  Its forward PE is near 12.5.  With a consensus target price of $34.89, the shares have an implied upside of 8.6% among the lowest of these companies.  Bemis Company shares closed Friday at $32.11, down 0.43.  The 52-week price range is $25.79 to $33.57. The packaging materials company also has a respectable dividend yield of about 3%, even if Goldman Sachs did downgrade the rating to “Sell” in recent weeks..

Dean Foods Co. (NYSE: DF) boasts a price to book value of 1.4  to 1, ranking it second among these companies.  The company’s market cap is $2.2 billion, the smallest of these companies.  Its forward PE is near 13.2, among the highest on this list.  With a consensus target price of $13.50, the shares have an implied upside 12.5%.  In Friday trading Dean Foods closed at $12.00, down 1.80% for the day.  The 52-week trading range is $7.13 to $13.90.  This milk and dairy producer has been in recovery mode.  It made this screen even after a recovery of more than 75% from the bottom.  In 2007, shares were worth more than $40.00.

Johnson Controls Inc. (NYSE: JCI) has a price to book value of 2.4 to 1, a comparatively high price to book value ratio among these companies.  With a market cap exceeding $26 billion, Johnson Controls is the second largest company ranked here.  Its forward PE is a tad greater than 12.  After robust expansion of earnings for the current year, analysts expect next-year earnings expansion exceeding 34%.  With a consensus target price of $48.50, the shares have an implied upside of 23.8%.  Shares of Johnson Controls closed Friday at $39.17, unchanged.  The 52-week price range is $25.63 to $42.35.  The car parts and systems manufacturer is one of the few which pay a dividend (about 1.6%) and this one has recovered mightily from the recession lows when shares fell to well under $10.00.