RECENT NEWS
Forbes  Aug 12  Comment 
Looking at the sectors faring worst as of midday Wednesday, shares of Financial companies are underperforming other sectors, showing a 1.1% loss. Within that group, The Charles Schwab Corporation (NYSE: SCHW) and CBRE Group Inc (NYSE: CBG) are two...
Yahoo  Aug 5  Comment 
Americans like to eat, drink and ... buy organic. And you can see those habits paying off-at least for some consumer staples stocks.
New York Times  Aug 4  Comment 
Disney’s quarterly results reflected the shifting fortunes of its TV and movie businesses, as cable properties like ESPN took more of a back seat to consumer products.
Forbes  Aug 4  Comment 
Looking at the sectors faring best as of midday Tuesday, shares of Materials companies are outperforming other sectors, higher by 0.2%. Within that group, Vulcan Materials Co (NYSE: VMC) and Martin Marietta Materials, Inc. (NYSE: MLM) are two of...
TheStreet.com  Aug 4  Comment 
  LOS ANGELES (TheStreet) -- -- Blockbusters and TV networks ESPN and ABC may gobble up the spotlight at Walt Disney Co. , but the company's theme parks and consumer products are poised to propel its stock to greater heights in the months...
The Hindu Business Line  Aug 3  Comment 
After witnessing faster growth in the rural markets, Godrej Consumer Products is planning to create specific products and pricing to cater to this market. Speaking to Businessline, Vive...
Forbes  Aug 3  Comment 
A consumer products company whose eco-friendly and hypoallergenic goods are intended to give parents peace of mind is now getting a piece of the minds of customers over the apparent failure of their reformulated SPF 30 sunscreen lotion.
Market Intelligence Center  Jul 31  Comment 
The patented option-trade picking algorithms that power MarketIntelligenceCenter.com's Artifical Intelligence Center found a trading opportunity with Consumer Staples Select Sector SPDR (XLP) that should provide a 2.02% return in just 140 days....
The Hindu Business Line  Jul 31  Comment 
Godrej Consumer Products Ltd (GPCL) expects its newly launched hair colour product, Nupur Coconut Henna Creme Hair Colour, to occupy 5 per cent of the overall hair colour segment in the country.
Benzinga  Jul 29  Comment 
It may not happen, but if tobacco giants Phillip Morris International Inc (NYSE: PM) and Altria Group Inc (NYSE: MO) merged, it will be a boon for consumer staples exchange traded funds such as the Consumer Staples Select Sector SPDR (NYSE:...




 
TOP CONTRIBUTORS

The Toy business leads this category, and by a wide margin. The 3 largest U.S. toymakers, Hasbro (HAS), Mattel (MAT), and JAKKS Pacific (JAKK), were all on the screen for significant periods of time. I think this is another illustration of how the Magic Formula does a lot of the work of digging up beaten down sectors for us. The first quarter is generally a weak one for toymakers, as most of their profits come in the Christmas season (as much as 60%).

The original thought was to separate between Consumer Staples (items that we must buy regardless of our financial condition) and Consumer Discretionary (luxury goods). However, many of the industries above would be ambiguous. For example, we need shoes (making them a staple), but in tight times we may decide to buy a store brand instead of more expensive Nike (NKE), adding a measure of discretion to the purchase. Consumer goods companies can make great long term investments - just ask Warren Buffett, whose investments in Coca-Cola, Anheuser-Busch Companies (BUD), and Procter & Gamble Company (PG) are legendary.

Forces affecting the Retail Industry

Brand is unquestionably the strongest form of competitive advantage in Consumer Goods. However, it's important to also judge the durability of the brand. For example, Coke is a brand known around the world, and has endured over 100 years of competition to still enjoy the top spot in the soda category today. That's a durable brand. Compare this to Gap (GPS).Ten years ago, Gap and it's spin off stores Old Navy and Banana Republic were considered fashionable and chic for the all important teen and college set. Today, the store is avoided by those same groups, lest their fashion sense be ridiculed by friends. That's a fickle brand. It's important to be able to separate a fad from a juggernaut. Add this to the PR problems Mattel faced last year with lead paint, and you have an unwanted sector, with some interesting potential investments.


Distribution is also important in the Consumer Goods sector. A company with a wider distribution network can leverage economies of scale to earn more on their fixed costs. An especially attractive arrangement is when one of these companies has an exclusive deal with a large distributor. Take Anheuser-Busch (BUD), for example. While this firm has an incredibly strong brand, they also require exclusivity from distributors. This allows them to lock out competitors like Molson Coors (TAP) and Miller, protecting profit margins. The soda companies also do this well. Have you noticed that McDonald's (MCD) only sells Coke products, while Pizza Hut (Yum! Brands (YUM)) only sells Pepsi? With these exclusive deals, competitors are blocked from those roads of distribution, protecting profits for the established companies.

Companies in the Consumer Products Industry (346)

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