Confident Consumers


When Vivian Hairston declared that consumers will always buy soap, diapers, food, and medicine, regardless of economic ups and downs, she was tapping into an underlying truth that helped the portfolio of stocks she gave BLACK ENTERPRISE last year gain momentum.

Indeed, Hairston, assistant vice president and senior portfolio manager in Huntington National Bank’s private financial group, notes that while consumer spending was adversely affected by higher interest rates and rising oil prices, her selection of stocks benefited from rising product sales. Her portfolio achieved an 8.52% gain during the 52-week period from Jan. 18, 2005, to Jan. 17, 2006, edging out the S&P 500, which gained 7.28%, and the Dow Jones Industrial Average, which grew by 2.52%.

Hairston described her portfolio as a small group of “good, solid companies that have proven track records of performance.” She says consumers have shown a commitment to the quality of these companies’ products and, in turn, these companies have taken advantage of trends that make their products more appealing to consumers.

A good example of this is PepsiCo Inc. (NYSE: PEP), which has been concentrating on producing healthier products such as energy drinks and reduced-fat and reduced-calorie snacks. Pepsi stock realized an 11.23% gain, moving from $52.53 to $58.43. “The company continued its thrust toward producing healthier products for consumers and that has helped them a lot,” Hairston says.

Procter & Gamble Co. (NYSE: PG) continued to benefit from quality products placed in highly visible positions in retail stores. Its stock rose 6.85%, moving from $54.63 to $58.37. Hairston predicts that P&G’s recent acquisition of The Gillette Co. will cause its stock to go up even more. “Sales of the company’s health and beauty products allowed Procter & Gamble to meet their earnings expectations, and their recent acquisition of Gillette fills a niche in shaving items, which is a wonderful fit for the company,” says Hairston.

Walgreen Co. (NYSE: WAG) showed a modest 1.96% gain, moving from $42.94 to $43.78. The company continues to grow the number of 24-hour Walgreens stores across the country. Although the convenience store chain provides low-cost generic drugs that bring in less revenue than name- brand drugs, Hairston thinks the company has greater prospects ahead. “With the new Medicare benefit, more prescriptions should be filled at Walgreens,” she says. And she explains that the profit margin on generic drugs are better: “A $15 name-brand drug could add $2 to the bottom line, whereas a $10 generic drug could potentially yield a $4 profit.”

By far, the big stock mover in Hairston’s selection was Lowe’s Cos Inc. (NYSE: LOW), which jumped from $57.23 to $65.27, a 14.05% gain. The company, which sells products and services for home improvement and renovation, enjoyed healthy revenues over the past year. “Even while the housing market slowed, people were still remodeling their homes and buying products from Lowe’s. And the rebuilding efforts underway in New Orleans will help the company’s bottom line,” Hairston says.


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