Consumer spending increased solidly in April, showing resilience in the face of the economic headwinds, with households boosting purchases at online retailers and spending more at restaurants and bars. Retail sales increased 0.4% in April, while core sales up 0.7%.
So, I think it might be ideal to buy Altria Group, Inc. (MO) and China Automotive Systems, Inc. (CAAS), considering their strong fundamentals.
Moreover, the Economist Intelligence Unit predicted that global retail markets would continue to recover from the impacts caused by the pandemic. According to the EIU, online sales will keep growing, with a year-over-year growth of 6.1% increasing their share of global retail sales to more than 14%, only slightly outpacing the 13.9% share in 2022.
Also, the global consumer packaged goods market is expected to expand at a CAGR of 2.98% until 2028.
On the other hand, demand for personal luxury goods is driving 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 period.
Take a look at the stocks mentioned above:
Altria Group, Inc. (MO)
MO manufactures and sells smokeable and oral tobacco products in the United States.
Its trailing-12-month gross profit margin of 68.82% is 120.1% higher than the 31.27% industry average. Its trailing-12-month EBITDA margin of 60.79% is 512.7% higher than the 9.92% industry average.
During the fiscal first quarter ended March 31, 2023, MO’s Oral tobacco products net revenue increased 2.4% year-over-year to $628 million. Net earnings came in at $1.79 billion. Its adjusted earnings per share increased 5.4% year-over-year to $1.18.
MO’s revenue is expected to increase 1.9% year-over-year to $5.47 billion for the fiscal second quarter ending June 2023. The company’s EPS for the same quarter is expected to increase 4.9% year-over-year to $1.32.
Shares of MO have gained 2.5% over the past month to close the last trading session at $45.30.
MO’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Quality and a B in Growth. It is ranked #5 out of 9 in the A-rated Tobacco industry.
Beyond what is stated above, we’ve also rated MO for value, Stability, Sentiment, and Momentum. Get all MO ratings here.
China Automotive Systems, Inc. (CAAS)
Headquartered in Jingzhou, the People's Republic of China, CAAS manufactures and sells automotive systems and components in the People's Republic of China and internationally.
Its trailing-12-month CAPEX/Sales of 4.19% is 31.7% higher than the 3.18% industry average. Its trailing-12-month net income margin of 5.24% is 19.7% higher than the 4.38% industry average.
CAAS’s net product sales increased 4.3% year-over-year to $142.24 million in the fiscal first quarter that ended March 31, 2023. Its net income increased significantly year-over-year to $7.88 million and net income attributable to parent company’s common shareholders per share came in at $0.23.
CAAS has surpassed EPS estimates in each of the trailing four quarters.
The stock has gained 51.7% over the past nine months to close the last trading session at $5.31.
CAAS’s robust prospects are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
CAAS has an A grade for Value and Sentiment. It is ranked #3 out of 46 stocks in the China group.
Click here to see the additional POWR Ratings for CAAS (Quality, Growth, Momentum, and Stability).
What To Do Next?
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MO shares were trading at $45.14 per share on Monday morning, down $0.16 (-0.35%). Year-to-date, MO has gained 0.85%, versus a 10.00% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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