tiprankstipranks
Why are Analysts Bullish on These Three Consumer Stocks?
Stock Analysis & Ideas

Why are Analysts Bullish on These Three Consumer Stocks?

The investment landscape is changing rapidly in 2022. While the Russia-Ukraine conflict enters its seventh week, indications are that sanctions will be further tightened around Russia. Meanwhile, China has placed Shanghai, a city of millions, in complete lockdown. A new COVID-19 variant has been identified, while supply chain issues, challenges of inflation, and labor shortages continue to pose risks.

This macro backdrop has kept investors on the edge of their seats, with stocks under specific sectors reacting differently to global developments. While picking the right stocks may seem like a daunting task, Tipranks Analysts’ Top stocks tool comes to the rescue. We have identified the top three sectors where Wall Street analysts are bullish. These are utilities, technology, and consumer goods.

Learn More About the Top 3 Sectors at TipRanks Live Talks

Let us take a deeper look at the top three stocks in the Consumer Goods space that analysts are viewing favorably.

Five Below  (NASDAQ: FIVE)

Specialty value retailer Five Below offers trend-right, high-quality products. Most items on offer have a price range between $1 and $5, with some items priced above $5. FIVE has a presence across 40 states with 1,200 stores.

In Fiscal 2021, sales jumped 45.2% to $2.85 billion, with comparable sales up 30.3%. The company opened 120 net new stores in 2021. Concurrent with this growth, earnings per share increased to $4.95 from $2.20 in 2020.

But there’s more. FIVE has come up with its ‘triple-double’ growth vision and targets for the long term. It endeavors to triple its store count to 3,500+ by the end of fiscal 2030. By the end of 2025, it aims to double its top line, more than double its bottom line, and open about 1,000 new stores.

Needless to say, analysts have been quite positive on the stock. Goldman Sachs, Morgan Stanley, Deutsche Bank, Barclays, Jefferies, and Citigroup have all given FIVE a buy rating in the last seven days

Goldman Sachs analyst Kate McShane has reiterated a Buy rating on FIVE while increasing the price target to $225 from $209. Due to factors such as the company’s Five Beyond rollout, new store additions, and new unit runway, McShane views the stock favorably.

Overall, the Street is Bullish on FIVE based on 14 Buys and four Holds, with a Strong Buy consensus rating and a price target of $216.56, which implies a potential upside of 30.7%.

Dutch Bros (NASDAQ: BROS)

Shares of Dutch Bros have gained 18.6% over the past month. It is one of the fastest-growing brands in the U.S. by store count. The company operates and franchises drive-thru shops serving espresso-based as well as hot and cold beverages.

BROS is present across 12 states via its 538 locations. In comparison, the company started 2020 with only 370 shops in seven states. Moreover, it plans to open 125 new shops in 2022. Longer-term, the company foresees at least 4,000 shops across the U.S. over the next 10 to 15 years.

For Fiscal 2021, BROS delivered an impressive performance. Revenue jumped 52.1% over the prior year to $497.9 million. Revenue from company-operated stores increased 65.1% during this period. For 2022, BROS expects to garner revenues in the $700 million to $715 million range.

Piper Sandler analyst Nicole Miller Regan has reiterated a Buy rating on the stock but decreased the price target to $75 from $85, which implies a potential upside of 40.2% for the stock. The analyst noted the company’s singular focus and favorable positioning.

Overall, the Street has a Strong Buy consensus rating on the stock based on three unanimous Buys. The average Dutch Bros price target of $65 implies a potential upside of 21.5% for the stock.

Arhaus  (NASDAQ: ARHS)

Arhaus is a lifestyle brand and omnichannel retailer that provides artisan-crafted home furnishings. Shares of the company have climbed 37.3% over the past month.

In fiscal 2021, net revenue surged 57.1% to $797 million on the back of robust demand across showroom and eCommerce channels, coupled with backlog order delivery. The company saw comparable growth of 51% during this period. Notably, Arhaus increased its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) by 77% during this period.

Impressively, the retailer achieved this growth despite supply chain constraints and challenging raw material and transportation costs. In 2021, Arhaus opened a ~500,000 square foot distribution center and upholstery production facility in North Carolina, and began the expansion of its production facility in Ohio.

For 2022, Arhaus sees net revenue landing somewhere between $1.13 billion and $1.17 billion. Adjusted EBITDA is expected to be between $145 million and $155 million.

Guggenheim analyst Steven Forbes has reiterated a Buy rating on Arhaus but decreased the price target to $12 from $14, implying a potential upside of 34.8%. Although Forbes noted that Arhaus’ quarterly showing was better than his expectations, he cited moderating growth in retail multiples as a reason for the decrease in price target.

Nonetheless, overall, the Street is Bullish on Arhaus based on six unanimous Buys, with a Strong Buy consensus rating and an average price target of $14, implying a potential upside of 57.3% for the stock.

Closing Note

Despite a challenging backdrop and amid labor challenges, these three names have shown resilience as well as solid growth. Over the long-term, investors could expect substantial returns driven by the sheer expansion of the footprint of these companies.

Download the TipRanks mobile app now

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Read full Disclaimer & Disclosure

Related News:
Workday Releases Details of its Dublin Expansion Plan
ITT Boosts Valves Business With Habonim Acquisition
Abbott’s Leadless Pacemaker Gets Green Light

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles