These Two Industries Are Taking the Consumer Sector by Storm…

by Steve McDonald, Investment U Analyst
Thursday, February 10, 2011

Pop quiz: Name two industries whose growth doubled that of the S&P Consumer Index over the past year.

What’s more, the upward trend is still very strong and there’s plenty more upside to come for these industries, according to analysts Keith Hughes of Sun Trust/Robinson Humphrey and Nik Modi of UBS.

I’m talking about the mattress and skin care industries, which saw growth of 65% and 70%, respectively, compared to 33% growth for the S&P Consumer Index.

And the sweet spots of this growth?

High-End Cosmetics Driving the Growth, With This Company the Pick of the Bunch

According to Modi, the high-end segment of the cosmetics market is driving the industry’s growth, fueled by an aging population returning to chic cosmetics with gusto.

In addition, emerging markets are returning to the top-of-the-line area of the cosmetics industry, which Modi attributes it to prestige and emotionally driven buying.

Within the group, Modi likes Estee Lauder. He sees its widespread cost-cutting efforts as the launchpad for new growth and expects similar growth results from the company in 2011.

Speaking of high-end growth…

This Industry Provides More Than Just a Good Night’s Sleep

Hughes says the mattress business is booming and buyers are also returning to the high-end of this industry.

While Hughes says mattress sales were flat last year, the current national advertising campaigns for the biggest name-brands and the return of high-end buyers are propelling sales to new highs.

And one of the best success stories in the mattress business is Tempurpedic. Sales of the “space-age” mattresses have blasted to record heights, based on the recommendations from current Tempurpedic owners. And that’s crucial, given the fact that the mattresses sell for several thousand dollars each.

There’s no way to put a value on this type of advertising and as a Tempurpedic owner myself, I can tell you they’re worth every penny.

So if you’re looking for a couple of outperformers within the consumer goods sector, take a closer look at the cosmetic and mattress industries, both of which are projected to continue their growth trend and outshine the rest of the S&P 500 Consumer Index this year.

Good investing,

Steve McDonald

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