Market Overview

Credit Suisse's Top 10 Consumer Discretionary Stocks: J M Smucker Out, Kellogg In

Credit Suisse's Top 10 Consumer Discretionary Stocks: J M Smucker Out, Kellogg In

The consumer discretionary sector has been one of the market’s brightest sectors in 2015, and the Consumer Discretionary SPDR (ETF) (NYSE: XLY) has gained 11.5 percent versus the S&P 500’s 0.7 percent gain year-to-date. For the first time in two months, Credit Suisse analysts have updated their top consumer discretionary stock picks in 10 different subsectors.

Here’s a full list of the names they chose.

Top 10 Consumer Discretionary Stock Picks

1. Apparel & Footwear: Hanesbrands Inc. (NYSE: HBI)

Analyst Christian Buss sees the company as a “strong and steady cash flow generator” with the opportunity to grow earnings via acquisitions and a mix shift toward premium products.

Related Link: You'll Have To Pay Up For Consumer Discretionary ETFs

2. Autos & Auto Parts: Magna International Inc. (USA) (NYSE: MGA)

Analyst Dan Galves believes the company will be “a key beneficiary of increasing vehicle globalization” and is confident that it can meet its 2017 revenue and margin targets.

3. Gaming & Lodging: Six Flags Entertainment Corp (NYSE: SIX)

Analyst Joel Simkins predicts the company will be able to capitalize on its pricing power in coming years, and he also likes the robust 4.3 percent dividend.

4. Homebuilding & Building Products: Caesarstone Sdot-Yam Ltd (NASDAQ: CSTE)

Analyst Mike Dahl sees “significant revenue and EBITDA growth over the next several years” and likes the company’s U.S. manufacturing capacity expansion and growing brand recognition. Caesarstone replaces Mohawk Industries, Inc. (NYSE: MHK) as the firm’s new top pick in the space.

5. Media, Cable & Satellite: Time Warner Inc (NYSE: TWX)

Analyst Omar Sheikh explained, “If we were to strip out HBO at valuations of $30 billion–$35 billion, the rest of Time Warner is currently trading at significant discounts to Disney and Fox.”

6. Packaged Food: Kellogg Company (NYSE: K)

Analyst Rob Moskow stated, “There is plenty of runway for positive ratings revisions” and believes the stock represents the best risk/reward balance among its peers. Kellogg replaces J M Smucker Co (NYSE: SJM) as the firm’s new top pick in the space.

7. Retail, Broadlines & Department Stores: Costco Wholesale Corporation (NASDAQ: COST)

Analyst Michael Exstein called the company “one of the few conventional retailers that continues to deliver positive traffic, market share gains, and a validated model for international expansion.”

8. Retail, Food & Drug: Dollar General Corp. (NYSE: DG)

Analyst Ed Kelly likes the company’s strong comparable store sales growth, accelerating square footage growth, improving margin outlook and aggressive share repurchase strategy.

Related Link: Holiday Hope For Retail ETFs With This Trade Strategy

9. Retail, Hardlines: Home Depot Inc (NYSE: HD)

Analyst Seth Sigman views the company as “a best-in-class retailer with a strong management team that participates in one of the strongest segments of retail.”

10. Restaurants: McDonald's Corporation (NYSE: MCD)

Analyst Jason West believes that CEO Stephen Easterbrook’s turnaround effort is starting to pay off and sees “room for upside on SSS momentum, SG&A savings and incremental leveraged buybacks.” McDonald's replaces Dunkin Brands Group Inc (NASDAQ: DNKN) as the firm’s new top pick in the space.

Disclosure: The author holds no position in the stocks mentioned.

Image Credit: Public Domain

Posted-In: Christian Buss consumer discretionaries Credit SuisseAnalyst Color Long Ideas Top Stories Analyst Ratings Trading Ideas Best of Benzinga


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