In “10 Things Americans Have Suddenly Stopped Buying”, Money Magazine describes ten products that are no longer popular with consumers and how the new trend is affecting the total sales of the companies producing these goods.
The ten out of favor products include: cereal, soda, gum, guns, cupcakes, Chef Boyardee canned pasta, golf gear, razors, bread and convertibles.
In this article, we will try to find out how this new trend affects the stocks of those that are producing out-of-favor goods and what the prospects of these companies are according to top analysts and bloggers.
Since we wanted to eliminate all biased opinions, we have taken into account only the latest recommendations from analysts and bloggers who have at least a four-star rating, according to TipRanks, a website that ranks experts (analysts and bloggers) according to their performance history.
The crash of soda—diet soda in particular—has been years in the making. Consumers have been increasingly turning to energy drinks, flavored water, and other beverages instead of the old carbonated caffeine drink of choice.
The Coca-Cola Company (NYSE:KO), the leading producer of soft drinks around the world, reported its second-quarter financial results on July 22. During its Q2 results, Coca-Cola reported International volume growth of 3%, while the company’s North American volume broke even; sales declined more than 1% to roughly $12.6 billion.
Only five top analysts are currently covering Coca-Cola’s stock. Three top analysts recommended to BUY the soda giant, while two top analysts have a HOLD rating on the stock. Top bloggers are also bullish on Coca-Cola with seven out of eight that have published analysis on the company in the last two months. One top blogger rated it as a Sell.
Goldman Sachs’ analyst Judy Hong maintained a Neutral rating on The Coca-Cola Company (NYSE:KO) with a price target of $43, following its Q2 results. “We expect relatively muted stock reaction. Volume and price growth was generally in line with expectations,” said Hong. “KO reported 2Q14 EPS of $0.64 versus our estimate of $0.63. Global unit case volume growth improved to 3%, as expected and global price mix of 2% was in line with our expectation, implying 5% underlying revenue growth. A lower than expected tax rate drove a penny beat versus our estimate.”
According to TipRanks, Hong has a +12.0% average return on all stocks and a 76% success rate in making recommendations.
On the other hand, on July 29, five-star blogger Todd Johnson recommended to BUY Coca-Cola stock saying, “I just don’t see Coca-Cola and its vast stable of beverages (Coke, Sprite, Minute Maid, PowerAde, Glaceau, etc.) dropping off in popularity and sales anytime soon.”
Johnson has a +9.7% average return on all stocks and a 70% success rate in making recommendations.
Beard-loving hipsters were part of the blame for the decline in razor sales last summer, according to Money Magazine. In 2014, companies like The Procter & Gamble Company (NYSE:PG), the parent company of razor giant Gillette, has continuously blamed poor sales on the trendiness of beards.
Procter and Gamble’s chief financial officer, Jon Moeller, acknowledged that hipsters were partially to blame, claiming America’s love affair with facial hair — particularly, the trend of growing mustaches in November known as “Movember” — is hurting sales of the company’s razors.
Five top analysts are currently covering Procter & Gamble. Two of the analysts recommend the stock, while three analysts have Hold ratings. Top bloggers are more bullish on the company; in fact, all five top bloggers that have published analysis on The Procter & Gamble Company (NYSE:PG)’s stock in the last two months recommended to BUY.
On July 11, Wells Fargo’s analyst Christopher Ferrara downgraded Procter & Gamble from Outperform to Market Perform with a price target of $85-$87 (from $88-$90). Mr. Ferrara noted expectations were low, but he sees no signs of progress and thinks share gains are less likely.
According to TipRanks, Ferrara has a +15.8% average return on all stocks and a 67% success rate in making recommendations.
Separately, on August 6, a blogger named Dividend Growth Investor recommended PG stock saying, “Procter & Gamble is a dividend king which has managed to increase dividends for 58 years in a row. It is the quintessential wide moat company with strong brand recognition. The stock is attractive at 17.70 forward earnings and a yield of 3.20%. This is the type of company I expect to hold forever.”
Dividend Growth Investor has a +18.0% average return on all stocks and a 86% success rate in making recommendations.
According to Money Magazine, in one recent four-week period, cereal sales were down 7% and cereal giant Kellogg Company (NYSE:K)’s sales decreased 10%. The reasons for cereal’s declining dominance at the breakfast table are many. As the Wall Street Journal reported, consumers are more apt nowadays to turn to yogurt or fast food in the morning and they’re less likely to have time to eat breakfast at home at all—not even a simple bowl of cereal.
Two top analysts are currently covering Kellogg, both having issued a Hold rating on the stock. On the other hand, four top bloggers have published analysis on Kellogg’s in the last two months, three of which gave the company a Sell rating, and one who rated it as a Buy.
On May 29, Seeking Alpha’s top blogger Jeroen Jongbloed wrote of Kellogg’s: “All things considered, I think now is not the time to purchase shares in Kellogg. It’s a great company with an extremely long dividend history, but it’s more expensive than it should be and the dividend yield is quite low at the moment. Furthermore, Kellogg’s balance sheet doesn’t make me feel entirely comfortable. However, if at some point in time there is a large drop in Kellogg’s share price; I may buy a few shares to profit from the ever-growing dividends.” Jongbloed has a +8.9% average return on all stocks and a 67% success rate in making recommendations.
Separately, Deutsche Bank’s four-star analyst Eric Katzman maintained a Hold rating on Kellogg with a price target raised to $66 from a previous $64. Katzman has a +7.9% average return on all stocks and a 60% success rate in making recommendations.
Due to heightened competition from mints and candies, chewing gum sales have dipped 11% over the past four years. The editorial board of the News Tribune of Washington state weighed in, saying it is wonderful that gum sales are down in the gutter. He reasoned, “Gum-chewing doesn’t do us any favors, making us look like cows chewing our cud. For humans, that’s not a good look.”
On July 24, Hershey Co (NYSE:HSY), the manufacturer of Bubble Yum, reported its second-quarter financial results which were in-line with expectations.
Two top analysts have covered Hershey within the last three months with one HOLD rating and one SELL rating. On the other hand, there are four top bloggers covering Hershey as well, but all have issued a unanimous