Five Consumer Non-Durables Stocks Billionaires Love

At the end of last month, the Commerce Department revealed that consumer spending in the U.S saw its largest increase in the past six years during the month of April. While economists had expected consumer spending to grow by 0.7% for the month, data released by the Commerce Department showed a 1.00% increase. This rise in consumer spending is great news for consumer non-durables companies, as they are usually the leading beneficiaries of such increases. Taking that into account, we thought this might be the right time to come up with a list of consumer non-durables stocks that the collection of billionaire investors tracked by Insider Monkey were most bullish on going into the second quarter. Read on to find out which five stocks topped the list.

Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).

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#5 Constellation Brands, Inc. (NYSE:STZ)

 – Billionaires with long positions (as of March 31): 10

 – Aggregate value of billionaires’ holdings (as of March 31): $1.74 billion

Let’s begin with Constellation Brands, Inc. (NYSE:STZ), which saw its ownership among the billionaire investors in our database inch down by one during the first quarter, though the aggregate value of their holdings in the stock rose by $212 million during the period. Billionaire-led hedge funds that increased their stake in the company during the quarter included Dan Loeb‘s Third Point, which upped its holding by 11% to 1.76 million shares. Constellation Brands, Inc. (NYSE:STZ)’s stock suffered a large drop in February after the company reported its fourth quarter earnings, but it has recovered since then and now trades up by 6.67% year-to-date. Last month, when the stock touched its lifetime high of $165.81, the company hiked its quarterly dividend to $0.40 per share from $0.31 per share, which translates into an annual dividend yield of 1.04%.

#4 PepsiCo, Inc. (NYSE:PEP)

 – Billionaires with long positions (as of March 31): 11

 – Aggregate value of billionaires’ holdings (as of March 31): $2.34 billion

PepsiCo, Inc. (NYSE:PEP) experienced the complete opposite of what happened with Constellation Brands in terms of billionaire ownership. While the number of billionaire investors in our system long PepsiCo, Inc. (NYSE:PEP) inched up by one during the first quarter, the aggregate value of their holdings in it shrank by 32%. Funds that lowered their stake in the company during the first quarter included billionaire Donald Yacktman‘s Yacktman Asset Management, which trimmed its holding by 7% to 13.40 million shares. After hitting their lifetime high of $106.94 last month, shares of PepsiCo rapidly fell back to the $100 level, which technical analysts think is now a strong support for the stock. On June 9, the Wall Street Journal reported that the company might tweak the formula of Diet Pepsi once again, as sales of the beverage have fallen considerably since last August when the company changed the recipe by replacing aspartame with sucralose.

We’ll check out the three most popular consumer non-durables stocks among billionaires on page two.

#3 Kraft Heinz Co (NASDAQ:KHC)

 – Billionaires with long positions (as of March 31): 13

 – Aggregate value of billionaires’ holdings (as of March 31): $2.72 billion

Amid an 8.7% rise in Kraft Heinz Co (NASDAQ:KHC)’s stock during the first quarter, its ownership among the billionaire investors that we track dipped by one, while the aggregate value of their holdings in it increased by a gargantuan $2.27 billion. Shares of Kraft Heinz Co (NASDAQ:KHC) were trading in the $70-to-$80 range for a long time after the completion of the Kraft/Heinz merger. However, they managed to break above that range last month after the company reported its first quarter earnings and are currently trading up by 15.15% in 2016. While analysts had expected Kraft Heinz to report EPS of $0.61 on revenue of $4.70 billion for the first quarter, the company managed to beat those estimates by a wide margin, declaring EPS of $0.73 on revenue of $6.57 billion. Following the earnings release, analysts at RBC Capital reiterated their ‘Outperform’ rating on the stock on May 5, while upping their price target on it to $92 from $88.

#2 The Coca-Cola Co (NYSE:KO)

 – Billionaires with long positions (as of March 31): 13

 – Aggregate value of billionaires’ holdings (as of March 31): $20.32 billion

Moving on, ownership of The Coca-Cola Co (NYSE:KO) among the billionaire investors in our system increased by three in the first quarter, while the aggregate value of their holdings in it also swelled, by $2.00 billion. Billionaire Jacob Rothschild‘s RIT Capital Partners was one of the hedge funds that initiated a stake in the company during the quarter, purchasing 412,000 shares of it. Though shares of the beverage giant have appreciated by 3.73% in 2016, they have been struggling to stay above the $46-level after breaking above it for the first time in April. The $0.35 per share quarterly dividend that Coca-Cola pays currently translates into a respectable annual dividend yield of over 3%. Earlier this month, the company announced that it, along with bottler Coca-Cola Femsa, has agreed to acquire Unilever’s soy-based beverage business, AdeS, for around $575 million.

#1 Mondelez International Inc (NASDAQ:MDLZ)

 – Billionaires with long positions (as of March 31): 15

 – Aggregate value of billionaires’ holdings (as of March 31): $4.09 billion

Though it’s the only stock in this list that is currently trading in the red for 2016, Mondelez International Inc (NASDAQ:MDLZ) was the most popular consumer non-durable stock among the billionaire investors covered by Insider Monkey at the end of the first quarter. Billionaire-led hedge funds that sold their stakes in the company during the first quarter included Paul Singer‘s Elliott Management, though overall ownership among billionaires rose by three during the quarter. Most analysts who track Mondelez International Inc (NASDAQ:MDLZ) are bullish on it, with the stock sporting an average rating of ‘Overweight’ and an average price target of $48.58 on it from the 24 leading analysts and research firms on the Street who track it. The consensus target price represents potential upside of 9.2% from the stock’s current price.

Disclosure: None