The current economic climate may be chilly for most people; but not everyone. According to Forbes’ recent “Ten Things We’re Still Buying” article, consumer confidence is at its lowest point in history. And, according to a Jan. 14 report released by the Commerce Department, retail sales were down 2.7% in December 2008 from November 2008 and 9.8% from December 2007.
Still, we did manage to spend $343.2 billion in December. Sure Paris Hilton may have splurged on a pink Bentley, but most of us didn’t. What did the common folk buy? Forbes noted that most of our recent spending has been, much to the chagrin of Paris, neither impulsive nor lavish.
The question remains, what are we buying? And better yet, are there any excellent penny stocks with tremendous upside waiting for their day in the sun? Forbes highlighted 10 sectors of profitable growth; I’m going to delve into a couple.
Whether times are good or bad, we all want affordable escapism. While movie attendance decreased by 5% in 2008, theaters made $9.8 billion, a 2% increase from 2007. Feel like staying at home? Video game sales climbed 14% year-over-year in 2008. Is your video gaming experience complete without accessories? Of course not.
Mad Catz Interactive, Inc. (AMEX: MCZ, Stock Forum) designs and manufactures accessories for all major video game platforms, including those manufactured by Microsoft, Nintendo, and Sony. The company also makes accessories for the Apple iPod.
While MCZ has shed more than half its value since the summer, strong second-quarter financial results and a string of new products and licensing agreements point to a strong future. In September, MCZ announced that it began shipping its Fender Precision Bass guitar for the Xbox 360. And is the first in a series of Rock Band products the company expects to release.
In November, MCZ announced that second quarter revenue was up 52.8% year-over-year at $25.8 million. Revenue for the first half of the fiscal year was up 55.8% at $48.97 million.
In early January, MCZ extended its portfolio with a full range of licensed Street Fighter IV, and Aviator accessories.
After a night at the movies or playing video games, nothing hits the spot like a burger or snack. While four-star restaurants may experience a decline in 2009, the National Restaurant Association forecasts that Americans will spend $566 billion at restaurants, a 2.5% increase over 2008. That means more of us are looking for fast, easy ways to eat – a la fast food.
A provider of snack food products and frozen foods, The Inventure Group, Inc. (NASDAQ: SNAK, Stock Forum) is a profitable company with growing revenues and improved operations. On October 22, SNAK announced that third-quarter revenue increased 17.5% year-over-year to $29.8 million. Net income was $1.1 million, a significant increase over the $41,429 for the same period in 2007.
Year-to-date net revenues climbed 30% to $85.2 million. Net income soared 367% to $2.2 million, or 12 cents per share. “In summary, our recent performance reflects significant improvement over the last several years and we're on track to deliver record results for this fiscal year,” noted Terry McDaniel, President and CEO.
While not traditional fast food, New Dragon Asia Corp. (AMEX: NWD, Stock Forum) conveniently serves billions of people. The company makes and sells instant noodles to the growing market of on-the-go, Chinese middle-class.
In November, NWD announced that third-quarter revenue was up 7% at $14.9 million. Net income slipped to $1.5 million. Year-to-date revenue increased 8% to $41.2 million. Net income fell to $5.2 million. Net income slipped primarily due to the increase in price of raw materials.
Peter Mak, CFO commented, "We are pleased to have continued our trend of top line growth in the third quarter. Our balance sheet remains healthy and due to our growth and profitability, we are well funded. Our working capital balance has increased by $10.9 million year to date to $47.1 million."
It looks as though a weak economy is going to be with us for quite some time. But people are always going to find items they can’t bare to part with – no matter what the economic climate.
In the Forbes article, retail marketing expert Martin Lindstrom noted, that aside from bare necessities, the things consumers are still buying have one thing in common: They provide a break from reality. “We want to dream ourselves away,” he said.
And there’s always a penny stock willing to help you do that.
Read more Stockhouse articles by John Whitefoot
