Consumer Products Companies Peek Out From Underneath

On this Flag Day 2010 (yup, Monday, June 14), there is a bit of statistical news on the market that I found very interesting.  At noon, according to Yahoo! Finance, 3 of the top 5 industrial segments gaining value were based on consumer sales.  Those categories are Music & Video Stores, Toy & Hobby Stores, and Sporting Goods Stores.  If you stop to think about it, that works with summer vacation.  And the top performing sector today is Textiles, which is not far removed from consumers.  Given the pivotal role of consumers in the US economy, it ought to allow all of us to breathe a little easier.

Please do your own diligence — we are writing about interesting companies, not providing investment advice.

Which Music & Video Stores?  Well, in spite of the talk of a Blockbuster bankruptcy, Netflix (Nasdaq: NFLX) is going from strength to strength, although they are far too large at $6 billion in market cap for us to follow.  But right behind them are Amarillo TX-based Hastings Entertainment (Nasdaq: HAST;, which operates entertainment superstores that sell anything entertainment — you think of it, they sell it.  And sure enough, their earnings report on May 17 showed revenues up nearly 5% year-on-year, and earnings beating estimates handily (prediction was $0.07, actual was $0.11).  HAST trades about 70,000 shares on an average day, and the price this afternoon is $8.00, within hailing range of a 52-week high.  Market cap is around $75 million.

And then there’s the slightly larger Tewksbury MA-based Avid Technology (Nasdaq: AVID;, which provides video-editing and other products and services to the video and film industries.  At a market cap of just over $500 million, AVID is trading at $13.20, with room to improve given its 12-month high of $17.99, and with good volume of more than 220,000 shares per day. 

And then there’s Plano TX-based Inc* (OTCBB: VCST;, far the smallest of the three at just under $10 million market cap, but with a product line that helps film or video producers distribute content over the internet or to mobile receivers.  VCST is trading for $0.27 vs a year-high of $0.44, with 150,000 shares changing hands in an average day.

The Toy & Hobby Stores on the good list are led by the St Louis-based Build-A-Bear Workshop Inc (NYSE:BBW;, which is, as you might guess, a purveyor of plush stuffed animals, in particular that presidential bruin, the Teddy Bear.  True to the spirit of Teddy Bears, btw, BBW announced that it is supporting marine mammals in the Gulf these days of oil-slick woes.  BBW is trading at $7.81 vs a year high of $9.76, for a market cap of about $160 million on trading of just under 150,000 shares a day.  Better than a simple cuddle, I would say.

And the Sporting Goods Stores are led by the rocketing-upwards Littleton MA-based Dover Saddlery (Nasdaq: DOVR;  Dover is, as you might guess, a saddler for both English & Western riders — same way that Hermes started out, and look where it got THEM.  And like Hermes, Dover operates its own stores — 13 of them.  And as you might expect, first-quarter results showed a bounce from loss to profit on stable sales (and winter is perhaps not the best time for saddles).  DOVR is trading at $3.20 vs a 52-week high of $4.89 for a market cap of just about $17 million on trading of about 17,000 shares a day.  Worth looking at, as some folks have obviously been doing today, because it was up 7.5% mid-afternoon. 

But more impressive than these stocks (and some of them are pretty interesting) is the fact that it is a consumer-products-dominated day.  WE LIKE IT. 

*a client of Allen & Caron, the publisher of this blog.


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