Five Consumer Durables Stocks Billionaires Love

The demand for white goods such as refrigerators, washing machines, air conditioners and other durable goods is mainly driven by consumer sentiment and the underlying health of an economy, which makes us believe that the consumer durables sector represents a reliable barometer for the health of any economy. But is the U.S. consumer durables sector worth the attention of the investment community? There are certainly a number of positive indicators pointing to continued strength in this sector. For instance, U.S. consumers have cut their debt loads since the not-so-distant financial crisis and the U.S. job market continues to tighten despite a disappointing jobs report for May. According to the Bureau of Labor Statistics, average hourly wages have grown by 2.5% in the past 12 months, which is yet another positive indicator for both the U.S. economy and the nation’s consumer sentiment. The S&P BSE Consumer Durables Index has advanced nearly 15% in the past 12 months versus the negative return of 1% posted by the S&P 500 Index over the same time span, so investors need to be selective as valuations in the consumer durables sector have risen quite strongly. With that in mind, let’s have a look at five consumer durables stocks the billionaire hedge fund managers tracked by Insider Monkey favor.

At Insider Monkey, we track around 770 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

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#5. Crown Holdings Inc. (NYSE:CCK)

– Billionaires with long positions as of March 31: 7

– Aggregate value of billionaires’ holdings as of March 31: $279.15 Million

The number of funds followed by Insider Monkey managed or founded by billionaire investors that have long positions in Crown Holdings Inc. (NYSE:CCK) increased to seven from four during the first three months of 2016, while the overall value of those positions rose by 63% quarter-over-quarter to $279.15 million. The company’s business involves designing and manufacturing packaged products such as steel and aluminum cans, glass bottles, and metal vacuum closers and caps for consumer goods. Crown Holdings has seen its market value gain nearly 3% since the beginning of 2016. The company’s net sales for the first quarter were impacted by foreign currency headwinds, the pass-through of lower material costs and a decrease in food can volumes, partially offset by an increase in beverage can volumes. Because consumers in both emerging and developed markets continue to favor cans over other beverage packaging formats, Crown Holdings has been busy expanding capacity to meet demand. Adage Capital Management, run by Phill Gross and Robert Atchinson, reported owning 3.43 million shares of Crown Holdings Inc. (NYSE:CCK) in its latest 13F.

#4. AutoNation Inc. (NYSE:AN)

– Billionaires with long positions as of March 31: 7

– Aggregate value of billionaires’ holdings as of March 31: $639.26 Million

AutoNation Inc. (NYSE:AN) lost some appeal among the billionaire asset managers monitored by our team during the first quarter of 2016, as the number of billionaires with stakes in the company dropped to seven from nine quarter-over-quarter. Meanwhile, the value of all those stakes fell by 25% sequentially to $639.26 million, mainly due to a 22% decline in the value of AutoNation shares. Analysts anticipate that AutoNation, the largest automotive retailer in the U.S., will be impacted the most among new-vehicle retailers by the recalls for potentially faulty Takata air bags, as these recalls keep getting bigger and bigger. Analysts at Goldman Sachs believe AutoNation’s used inventory that cannot be sold because of the recall will increase meaningfully by the end of the second quarter, which will impact notably the company’s full-year bottom line. The auto retailer has seen the value of its shares decline by 20% year-to-date. Ricky Sandler’s Eminence Capital had 3.63 million shares of AutoNation Inc. (NYSE:AN) in its portfolio at the end of March.

The next page of the article will reveal three other consumer durables stocks loved by the billionaires tracked by our team.