Consumer staples companies include companies that provide consumer products and services that are considered necessities and thus would not be impacted severely in an economic slowdown.
We can see this dynamic by comparing the free cash flow payout ratios of a few
different consumer staple companies to cyclical businesses and companies with large investment opportunities.
Top Consumer Stocks WMT +0.23 % MCD +0.22 % DIS +1.17 % CVS +1.17 % KO +0.70 % Consumer stocks were broadly higher Friday, with shares of
consumer staples companies in the S&P 500 advancing about 1.0 % while shares of consumer discretionary firms in
Paul Moroz, Mawer Investment Management's deputy chief investment officer, points out that many emerging -
market consumer staples companies did exceptionally well this year because they offered investors stability, dividends and growth.
Since coming out of the recession, the rate on the 10 - year Treasury note has explained roughly 80 % of the relative value (the P / B of the sector versus the P / B for the S&P 500)
for consumer staples companies.
But even with markets at all time highs, there are still some companies that caught my eye, such
as consumer staple companies (KraftHeinz, General Mills, Kellog, Anheuser Bush etc) or businesses in the insurance sector.
Last year, the fund benefited
from consumer staples companies that have «stronger - growing franchises that weren't as impacted by consumer preferences,» said Krantz.
In March, I decided to use the price weakness to put around USD 11» 000 of my cash pile to work and acquire some shares of following
British consumer staple companies:
In addition to KMB, many
other consumer staple companies are showing up with green buy indicators on our spreadsheet, and during the next month, we may add to current positions such as GIS (General Mills), KHC (Kraft Heinz), PEP (Pepsico), and of course, KMB (Kimberly - Clark).
This preference for growth manifested in the outperformance of both stable growers, like
defensive consumer staple companies, as well as technology firms benefiting from secular trends.
Top Consumer Stocks WMT 0.57 % MCD +0.21 % DIS +0.62 % CVS 0.59 % KO 0.44 % Consumer stocks were edging higher today, with shares of
consumer staples companies in the S&P 500 adding over 0.4 % while shares of consumer discretionary firms in
Top Consumer Stocks WMT 0.09 % MCD +0.38 % DIS +1.14 % CVS +0.99 % KO +0.52 % Consumer stocks were broadly higher Friday, with shares
of consumer staples companies in the S&P 500 advancing about 0.6 % while shares of consumer discretionary firms
From a macro perspective,
consumer staples companies are becoming a decreasingly important part of the overall domestic economic pie.
-- Dividend - rich shares of utilities, phone and
consumer staples companies could get hurt, says James Liu, Global Market Strategist for J.P. Morgan Funds.
This preference for growth manifested in the outperformance of both stable growers, like defensive
consumer staple companies, as well as technology firms benefiting from secular trends.
The lifestyle and flexibility are way more important than arguing over this value trap or that
consumer staples company.
A lot of
consumer staples companies are struggling to sustainably grow,» Krantz said.
The chart below shows illustrates this with
the consumer staple companies (Coke, Pepsi, Colgate, and Procter & Gamble) having much larger payout ratios than cyclical business (Dow and Deere) and growth companies (Visa and Roper).
Unilever is the classic defensive
consumer staple company.
Microsoft (MSFT) started paying out cash in 2003 and Intel offers a yield stronger than many of
the consumer staple companies.
Kimberly - Clark is
a consumer staple company, producing many necessary goods that dominate the household isles in supermarkets: diapers, tissues, feminine products, etc..
Like most of
the consumer staple companies, it is rare that Nestle stocks are really cheap.