As Americans Cut Back, These Companies Are Cashing In

Consumers are eating in, holding on to their cars longer and cutting back on entertainment. That means companies that make pasta, sell replacement auto parts and let you stay home and watch a movie (no babysitter needed) are benefiting. So are discount retailers. And with the economy mired in recession and likely to remain that way for most of the rest of the year, stocks of companies that help consumers rein in costs may still have room to run.

Netflix (symbol NFLX) is a conspicuous example of a business that is profiting from our disaffection with conspicuous consumption. The company, which mails DVDs to your home and delivers movies over the Internet via its new Roku device, has seen its market share jump from less than 6 percent in 2003 to 18 percent last year, said Ronald E. Rowland, founder of AllStarInvestor.com, a Web-based investment newsletter, and chief investment officer of Capital Cities Asset Management. The formula for Netflix's popularity? Convenience and low price. Memberships start at a loyalty-inspiring $4.99 a month.

The stock, which closed at $44.50 on Monday, has climbed 49 percent this year.

In addition to watching movies on the small screen, consumers are doing dinner at home. So companies that sell pasta and other packaged foods, such as American Italian Pasta (AIPC) and General Mills (GIS), stand to benefit from the national belt-tightening. Shares of American Italian Pasta -- which makes brand names, such as Mueller's, as well as private-label products -- have surged 45 percent this year, to $32.29.

The stock of General Mills, which makes products from Cheerios to Betty Crocker cake mixes, has been less stellar, sinking 16 percent, to $50.81, in 2009 through Monday. Stephen Biggar, global director of equity research at Standard & Poor's, said he thinks both stocks can advance over the next few months. "The new chic of staying home will continue until we get a good employment number," he said.

When people do leave the house, they hunt for bargains. That has helped discounters such as Wal-Mart (WMT) and Family Dollar Stores (FDO). Family Dollar, which used to cater to lower-income Americans, has become popular among the middle-income set, thanks to the economic slowdown and an expanded line of merchandise, including food.

Since the year began, shares of Family Dollar have climbed 28 percent, to $33.31.

Instead of buying new vehicles, consumers are fixing up the ones sitting in their driveways. That's helped the stocks of companies that sell car parts to do-it-yourselfers, such as Advance Auto Parts (AAP) and O'Reilly Automotive (ORLY). Shares of both companies have risen 20 percent through Monday, with O'Reilly reaching $36.83 and Advance Auto advancing to $40.30.