Portfolio Highlight: Consumer (Part 1)

As the global economy has made its recovery from the global financial downturn in 2008, increased demand has helped to bolster consumer sector stocks. Below are some of my stock picks for companies in the consumer sector.

KB Home (KBH)

PE Ratio: 1.73

52 Week Low/High: 11.76 - 18.98

KB Home is an American homebuilding company. Since its founding in 1957, the company has built 500,000+ homes, with a focus on constructing homes for first-time home buyers. KB Home was the first company to be traded on the New York Stock Exchange (NYSE) as a homebuilder and was a Fortune 500 company from 2000 to 2008.

In late 2008, the housing market reported the largest price drop in its history, one incident taking place during the burst of the United States housing bubble. Housing prices began climbing as early as 2004, reaching their peak in 2006. However, housing prices at the time were highly overvalued, forming an economic bubble. Then, without forewarning, the housing market crashed, an incident attributed as a primary factor of the 2007-2009 recession in the United States. As a result of the housing market crash, many parties suffered losses, including a direct impact on home builders. Before the housing bubble burst, KB Home was trading at a high of over $80, afterwards dropping to as low as $7.

Now into 2015, there is hope for home builders like KB Home to see a steady recovery. Currently, KB Home is trading at a PE ratio of 1.73, a cheap valuation for the company, meaning that there's ample value to be found in purchasing the stock. Although KB Home has failed to capitalize on the beginning of the housing market recovery, its smart strategic approaches to the market, new communities built in California and Colorado, as well as its impressive Q1 earnings, KB Home is set to make a comeback in 2015.

ScanSource Inc. (SCSC)

PE Ratio: 14.64

52 Week Low/High: 31.32 - 42.99

ScanSource is a wholesale distributor of specialty technology products headquartered in Greensville, South Carolina. The company provies distribution services for technology manufacturers and sells to resellers in the specialty technology markets, such as point-of-sale (POS) and Barcode, Physical Security, and Communications. ScanSource offers various products and services for resellers, including training programs, business partnerships, and physical office goods to help the growth of businesses.

With partnerships with companies like Motorola Solutions, Honeywell International Corp., Cisco Systems, and Oracle Communications, ScanSource has secured a group of strong clientele to support its business model. While the specific products produced by ScanSource are slightly difficult to evaluate, the company's balance sheet and income statement show that ScanSource is a reliably managed business. Not only is the company sitting with less than 0.05 debt/equity ratio, its current ratio (current assets/current liabilities) is 2.40. With an impressive financial track record, paired with a PE ratio just under the industry average, now is a time to invest the company while value still exists.

STRATTEC Security Corp. (STRT)

PE Ratio: 10.91

52 Week Low/High: 59.16 - 110.96

STRATTEC Security Corp. is a producer of automotive locks and keys based in Milwaukee, Wisconsin. STRATTEC designs, develops, manufactures, and markets mechanical locks, electronically enhanced locks and keys, and ignition lock housings, along with other related products. STRATTEC acts as a OEM (Original Equipment Manufacturer) for major automobile manufacturers in North America and around the world, including Ford Motors, GM, Hyundai/Kia, Honda, Nissan, and others.

As a part of the global financial downturn was the automotive industry crisis starting in 2008. Different factors lead up to the crisis, including an increase in the price of automotive fuels and credit crunch. As a result, auto manufacturers around the world suffered, especially the U.S. automotive market. In order to compensate for losses in sales, many U.S. automakers were forced to limit production to cut losses, directly impacting parts manufacturers like STRATTEC, whose stock prices dipped as low as $8.34 in 2009.

STRATTEC prices were able to make a comeback in 2013/2014, returning to its original levels as the automotive industry began to recover from the crisis spanning 2008-2010. As with many companies effected by the financial crisis, good companies with quality management and operations suddenly became affordable, the opportune time for investors to snatch them up. This fact holds true for STRATTEC, with clean company financials and PE ratio at 10.91 lower than the industry average. As 2015 progresses, STRATTEC will hopefully continue its steady growth.

Part 2 coming soon!