Sector Profit Alert: Consumer Staples

June 18, 2009

Stocks Rated “Buy” and “Sell”

One of my favorite stocks, Green Mountain Coffee Roasters (GMCR), is thriving from the trend we’ve just identified. This is a great example of a Consumer Staples manufacturer that’s doing great right now. As caffeine junkies shy away from $5 lattes at premium stores like Starbucks and brew their own java to save money, this stock has exploded. GMCR reported that its 1Q sales jumped 60% over 2008—and that’s in the worst of the recession! As a result, shares exploded 40% in one day. (My Quantum Growth subscribers will fondly remember this, because we cashed out GMCR soon after for a stunning 80% gain in just 10 weeks). Green Mountain is still rated a “Strong Buy” and gets an A in my Portfolio Grader stock-ranking database, so I anticipate more gains to come for this stock and other food manufacturers.

On the other hand, discounter Costco (COST) is a prime example of how Food & Staples Retailing stocks have suffered mightily lately. Costco was all the rage at the end of 2008 as value-conscious consumers flocked to these stores, but the stock has lost a lot of momentum. Just a few weeks ago, COST reported that its net income was down almost 30% for the most recent quarter, and same-store sales were down 7%. As a result of fading store traffic, COST shares are trading at the exact same price as they have since late March, while the S&P 500 has increased 17% in value! Investors holding Costco shares kept their money “safe” these past three months, but they certainly didn’t see any profits. This stock has been steadily weakening in Portfolio Grader and is a D-grade—a “Sell.”

Here are some other stocks that are trending up in Portfolio Grader and are rated “Strong Buys,” as well as a few stocks that have clearly been on the decline. Click on any ticker to view an easy-to-understand graph and my in-depth analysis of the stock’s fundamental trend:

Consumer Staples Stocks Rated “Strong Buy”

Coffee Holding Co. (JVA): Food Products industry
Lancaster Colony (LANC): Food Products industry
Orchid Paper Products (TIS): Household Products industry

Consumer Staples Stocks Rated “Sell”

Safeway (SWY): Food Staples & Retailing industry
Kroger (KR): Food Staples & Retailing industry
Supervalu (SVU): Food Staples & Retailing industry

This list is names the best of the best and the worst of the worst when it comes to investing in the Consumer Staples sector. Any or all of the strong buys would make a great addition to your portfolio.

Next Up: Utilities

I hope you’ve enjoyed the first edition of Sector Profit Alerts and that you’re ready to add the stocks I’ve mentioned here to your holdings.

Next Thursday, I will be breaking down the Utilities sector and highlighting the profit opportunities and the pitfalls in the related industries. Remember you will only get buy and sell instructions on these FREE weekly stock picks here in my weekly installments of Sector Profit Alerts. So check your email next Thursday, June 25, for the next exciting issue of this series!

Until then,

Louis Navellier