Some businesses prosper regardless of economic or market conditions. They're simply producers of products and services of which people are always in need, like soap.
Economists call these businesses non-cyclical, and investors have long prized them for the predictability of their earnings and, if they're well managed, their ability to grow. That said, not all non-cyclicals are worthwhile investments. Many get bid up beyond fair value, while others either don't offer healthy dividends or just plain get stuck: the stock doesn't move because of debt issues, branding problems or poor management. We have compiled here a brief list of consumer non-cyclicals that are on the move and still have respectable fundamentals. (To learn more, see Cyclical Versus Non-Cyclical Stocks.)
IN PICTURES: Eight Ways To Survive A Market Downturn
Beauty Business is Eternally a Buy
CCA Industries, Inc. (AMEX:CAW) operates in the health and beauty business, producing, among other things, skin- and foot-care products, shampoos and perfumes. The stock has increased 35% in the last three months, despite a recent cut in the dividend. The yield, however, was abnormally high, and even after the cut stands currently at 9.4%. CCA trades with a P/E ratio of 17.60 and at a mere 80% of book value. The company's average annual rate of (earnings) growth was 4.9% over the past five years.
Embotelladora Andina SA (NYSE:AKO.A) is the name of Coca Cola's bottler in Latin America, with a focus on production and distribution in Argentina, Chile and Brazil. In the spring of this year, the company shocked shareholders with the announcement of its regular dividend – and an additional dividend that raises the current annual payout to a meaty 12.4%. To boot, the stock is up nearly 100% from lows set in October, 2008 to sit at $14.20. It trades with a trailing P/E of 12.3.
Profit from Popular Perennial Paper Products
Deluxe Corporation (NYSE:DLX) is a Minnesota-based maker of customized checks, business cards and forms for financial institutions and small business. The company's fundamentals read like a guide to value investing. The current P/E multiple on the shares is 8.6 times, and the yield is 6.6% annually. The stock trades at 0.55-times last year's sales. Deluxe is not without its institutional admirers, as well. The shares are 80% owned by investment professionals who, since March, have jacked the stock price up over 140%.
Many consumer non-cyclicals no longer offer investors the value or the payout they need to lay down their hard earned cash. But these companies still offer fetching fundamentals to those looking for quality investments at a good price. (To learn more, read The Value Investor's Handbook.)