Consumer stocks perk up after a bloody year

By Martinne Geller - Analysis

NEW YORK (Reuters) - Bargain prices and upbeat earnings surprises have enticed investors to start browsing among consumer stocks again after a confluence of macroeconomic events hammered the sector over the past year.

Following a time when plunging home values, rising food and gasoline costs and a crippling credit crisis have sent shares of companies exposed to U.S. consumers tumbling, some investors are starting to see pockets of possibility.

Whirlpool Corp (WHR.N: Quote, Profile, Research, Stock Buzz), PepsiCo Inc (PEP.N: Quote, Profile, Research, Stock Buzz), Anheuser-Busch Cos Inc (BUD.N: Quote, Profile, Research, Stock Buzz), Mattel Inc (MAT.N: Quote, Profile, Research, Stock Buzz), Amazon.com Inc (AMZN.O: Quote, Profile, Research, Stock Buzz) and RadioShack Corp (RSH.N: Quote, Profile, Research, Stock Buzz) topped Wall Street's profit estimates in recent days, with the appliance maker, soft drink maker and online retailer affirming their full-year outlooks.

Shareholders were handsomely rewarded, with Whirlpool shares rising 13 percent, Amazon jumping 16 percent, and RadioShack gaining 14 percent.

"We're not out of the woods yet, but I think you can say hopefully we've found bottom here," Edward Jones analyst Jack Russo said. "It just depends how long we scrape along the bottom. Hopefully these earnings reports will go a little bit toward restoring some confidence."

Russo said investors are nervous about consumer spending, which makes up two-thirds of U.S. economic growth, but that caution is already priced in, especially in stocks of consumer product makers like Coca-Cola (KO.N: Quote, Profile, Research, Stock Buzz), Pepsi and Procter & Gamble Co (PG.N: Quote, Profile, Research, Stock Buzz), whose stocks are respectively down about 15 percent, 11 percent and 12 percent so far this year.

"The consumer sector sold off first and has sold off longer than finance," said Janna Sampson, co-chief investment officer with OakBrook Investments in Lisle, Illinois. "We were anticipating a recession, so we actually started to see that sell-off early."

Sampson said she liked shares of Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research, Stock Buzz) and McDonald's Corp (MCD.N: Quote, Profile, Research, Stock Buzz), which are "a little less sensitive to the economic cycle," and Home Depot Inc (HD.N: Quote, Profile, Research, Stock Buzz) and Harley Davidson Inc (HOG.N: Quote, Profile, Research, Stock Buzz), which have fallen so much they're more likely now to rise, even without a home pricing recovery.