Smarter News Now
  • About Us
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
  • Email Whitelisting
No Result
View All Result
  • Top News
  • Economy News
  • Forex News
  • Investing News
  • Stock News
  • Politics News
  • Editor’s Pick
  • Top News
  • Economy News
  • Forex News
  • Investing News
  • Stock News
  • Politics News
  • Editor’s Pick
No Result
View All Result
Smarter News Now
No Result
View All Result
Home Stock News

Strength of U.S. consumer staples stocks shows cracks as market recovers

by
April 14, 2020
in Stock News, Top News
0
Strength of U.S. consumer staples stocks shows cracks as market recovers
0
SHARES
6
VIEWS
Share on FacebookShare on Twitter

(C) Reuters. FILE PHOTO: Coca-Cola Imported from Mexico is shown for sale at a market in Encinitas California

By Lewis Krauskopf

NEW YORK (Reuters) – A broad rebound in U.S. stocks is leaving behind shares of some supermarkets, household product makers and other staples companies that provided a haven in last month’s coronavirus-fueled selloff.

The U.S. consumer staples sector is up 22% since March 23, as of Tuesday afternoon, lagging a rally that has seen the S&P 500 gain nearly 27% in that period.

Consumers stocking up on groceries, cleaning supplies and other essential goods last month helped boost the sector’s performance and bolstered its reputation as a hideout during uncertain times.

The group is down only 7.5% since the S&P 500 hit its closing high on Feb. 19, buoyed by gains in stocks such as Clorox (N:CLX), General Mills (N:GIS) and Kroger (N:KR). The S&P, by comparison, has lost 16% from its high.

But the sector could stall if investors believe that unprecedented stimulus efforts from the Federal Reserve and more than $2 trillion in government bailouts can help the economy recover quickly from the damage caused by the lockdowns that have accompanied the coronavirus.

“You want to have some exposure to the staples but you don’t want to be overly exposed,” said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC.

“They are not going to be the group that leads when the market begins to see a turnaround in the economy.”

(Graphic: Staples stocks vs market in 2020 – https://fingfx.thomsonreuters.com/gfx/mkt/oakveyegvrd/2020-04-14_11h10_37.jpg)

Pavlik manages portfolios at SlateStone that have shares of Procter & Gamble (N:PG) and Costco Wholesale (O:COST) but are slightly underweight the sector.

First-quarter earnings start for the group next week, including reports due from P&G, Coca-Cola (N:KO) and Kimberly-Clark (N:KMB). Consumer staples companies in the S&P 500 are expected to post a 0.8% rise in quarterly earnings compared to a decline of 12.3% for companies in the index overall, according to IBES data from Refinitiv.

Sales may already be fading, however. After soaring during the initial weeks of the lockdown in March, U.S. spending on consumer products has begun to normalize compared with a year ago, according to a report from market research firm IRI.

Still, investors’ outlook for the sector could hinge on how quickly they believe the economy and market could bounce back. Indeed, there’s still little clarity on the trajectory the pandemic will take in coming months or the full extent of the financial damage it will cause.

While sales of some products could slow if fears related to the pandemic subside, even some growth could make the group a standout in a downturn, said Arun Sundaram, an equity analyst at CFRA Research. His firm rates the staples sector “overweight.”

“Moderation isn’t bad as long as sales don’t go negative, which you could see in some other industries,” Sundaram said.

The sector also offers a dividend yield of 3%, according to Refinitiv data. That is above the 2.6% yield for the overall S&P 500 at a time when bond yields near record lows have stoked investors’ thirst for streams of income.

Dividends are one reason David Katz, chief investment officer at Matrix Asset Advisors, owns staples despite his view that stocks in the sector will not rise as much as others in a recovery. Matrix added to its holding in Kellogg (N:K) and initiated a position in Coca-Cola during the recent selloff, Katz said.

Owning staples allows investors who are “uncomfortable” in the market to stay with stocks because of staples companies’ relatively strong balance sheets and business models that can help them navigate a deep recession, Katz said.

“For people who think they should be in the stock market but don’t want to be in the stock market,” Katz said, “that’s a great way to be involved.”

Strength of U.S. consumer staples stocks shows cracks as market recovers

ShareTweetPin

Related Posts

Editor's Pick

The New Canadian Business Is Here!

October 4, 2021
The New Canadian Business Is Here!
Editor's Pick

The New Canadian Business Is Here!

October 4, 2021
bose corp
Top News

Bose Stock: Advantages of Investing in the Modern Audio Business

July 13, 2021
HEB store
Top News

What Is the HEB Grocery Stock Price & Value?

July 7, 2021
OnlyFans logo
Top News

OnlyFans Stock: What Is the Point to Invest in Popular Adults Only Service?

July 6, 2021
what is IV crush
Top News

IV Crush: Why You Should Be Aware of a Volatility Crush

June 23, 2021
Next Post
Oil Tumbles 10% Amid Texas Infighting Over Cuts, Expected Weekly Builds

Oil Tumbles 10% Amid Texas Infighting Over Cuts, Expected Weekly Builds

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Email Address *
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!
 

Recommended

Watch Now: Here’s What’s Moving Markets – March 19 (Video)

March 19, 2020
GM tells Mexico workers it plans May 20 restart at Silao plant

GM tells Mexico workers it plans May 20 restart at Silao plant

May 17, 2020
France builds 20 billion euro fund to help recapitalise ‘national champions’

France builds 20 billion euro fund to help recapitalise ‘national champions’

April 10, 2020
Copper giant Peru to gradually ease restrictions on mining sector in May

Copper giant Peru to gradually ease restrictions on mining sector in May

May 3, 2020
Pound Climbs After BOE Maintains Size of Bond-Buying Program

Pound Climbs After BOE Maintains Size of Bond-Buying Program

May 7, 2020
A former Apple worker just launched a new app to help motorists manage their vehicles. Check out the pitch deck he used to win $2 million in funding.

A former Apple worker just launched a new app to help motorists manage their vehicles. Check out the pitch deck he used to win $2 million in funding.

September 23, 2020
  • About Us
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
  • Email Whitelisting

Copyright © 2022 SmarterNewsNow.
All Rights Reserved.

Disclaimer: SmarterNewsNow.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

No Result
View All Result
  • About Us
  • Contact Us
  • Email Whitelisting
  • Home
  • Privacy Policy
  • Terms & Conditions
  • Thank You

Copyright © 2020 SmarterNewsNow. All Rights Reserved.