The American consumer is responsible for roughly two-thirds of economic activity. This means that healthy consumer spending levels are the primary driver of U.S. economic growth.
Sales of a wide range of goods and services have brought the economy back to its feet after the pandemic wreaked havoc on many retailers. Retail sales took a step back in July amid rising COVID concerns so this will be a key development to watch as the recovery unfolds.
Another thing for investors to watch is the level of insider activity in consumer goods stocks. That’s because corporate executives and board members are the first to know how well a company is performing under current economic conditions. Their trading can therefore be indicative of the likely direction of the stock.
Let’s look at a few consumer goods stocks that insiders have been tossing in the shopping cart.
Is Energizer Holdings a Post-Earnings Buy?
Since climbing above $50 in April 2021, Energizer Holdings (NYSE: ENR) has lost power. The battery company of Energizer Bunny fame is in bear market territory down more than 20% from its recent peak. Yet there’s at least one insider who thinks it will recover and keep going and going higher.
On August 11th, Chief Financial Officer (CFO) Timothy Gorman purchased 5,875 Energizer shares at a weighted average price of $40.89. This brought the executive’s direct position to 86,462 shares meaning he owns approximately $3.5 million of the stock. The stock has yet to move much from the CFO’s purchase price but the buy is nevertheless a bullish sign for a company that has been largely rangebound over the past 18 months.
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It is also encouraging that no Energizer insiders have sold shares during the stock’s four-month losing skid. Better yet, just one small sell transaction has been executed this year compared to eight buys.
Energizer also has the support of sell-side analysts. Since the company posted better than expected second-quarter results last week, five firms have reiterated their ‘buy’ ratings with target prices ranging from $50 to $60.
Are Insiders Buying Sally Beauty Holdings Stock?
Sally Beauty Holdings (NYSE: SBH) went on a tremendous seven-month run through May 2021. Its stock price more than doubled. Increased consumer demand for beauty products and strong online sales have led to a stunning makeover for the retailer.
In recent weeks, however, Sally Beauty has faced selling pressure and now finds itself more than 30% below its peak. President & CEO Christian Brickman recently pounced on the downturn. Earlier this month he bought $189,200 worth of the stock when it had slipped below $19.
The 10,000 share buy increased Mr. Brickman’s holdings to 471,136 shares. This represents less than 1% of the shares outstanding but it is still good to see an executive with skin in the skincare game. It is also nice to see a member of the leadership team step in to buy when the stock hits a rough patch.
Sally Beauty’s most recent quarterly performance showed that the beauty supplier is benefitting from people giving increased attention to personal care as they spend more time outside the home. Sales topped $1 billion. The company is wrapping up a multi-year transformation this year and could have a strong 2022 if its retail locations around the world continue to reopen.
Is the Hibbett Sports Pullback a Buy Opportunity?
Hibbett Sports (NASDAQ: HIBB) has been one of the biggest beneficiaries of the strong consumer spending environment. Surging demand for athletic apparel, footwear, and sporting goods drove some stellar fiscal 2021 results—and one of the biggest runs off the bottom for a retail stock.
After ascending for 14 of 15 months through June 2021, Hibbett Sports is finally taking a breather. With the stock in danger of finishing lower for the second straight month, investors that missed this runaway train may finally have an entry opportunity.
Since late June there has been a good amount of insider buying in Hibbett Sports. That’s when Senior VP of Operations Benjamin Knighten completed a $101,250 purchase at $81.00 per share.
More recently, another SVP, David Benck added 2,000 shares to his 5,995-share position. Also in mid-July, Chief Information Officer (CIO) Ronald Blahnik bought 2,200 shares when Hibbett was trading in the high $80’s.
The stock price has since slipped into the low-$ 80s but in low trading volume. Hibbett Sports is scheduled to announce second-quarter results next week. The market could be treated to another big earnings beat as has often been the case lately. The fact that insiders have been topping off their positions ahead of the report suggests the stock could soon sprint back into the $90’s.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Hibbett (HIBB) | $87.49 | flat | 1.14% | 10.77 | Hold | $83.50 |
| Sally Beauty (SBH) | $14.22 | +0.9% | N/A | 9.88 | Hold | $13.50 |
| Energizer (ENR) | $38.43 | -0.9% | 3.12% | 73.91 | Hold | $37.63 |
