RECENT NEWS
The Hindu Business Line  Apr 24  Comment 
Crompton Greaves’ shares fell sharply by nearly 8 per cent today as Avantha Group will sell its entire holding of 34.37 per cent in demerged consumer products business of the company to private eq...
Financial Times  Apr 23  Comment 
Sales at consumer products company hit by 20% rise in currency
MarketWatch  Apr 19  Comment 
Earnings season may have gotten a little bit tougher as heavyweights from the industrial, consumer staples, and tech sectors report this week following a big Friday selloff.
Forbes  Apr 17  Comment 
In afternoon trading on Friday, Utilities stocks are the best performing sector, losing just 0.6%. Within that group, CenterPoint Energy, Inc (NYSE: CNP) and PG&E Corp. (NYSE: PCG) are two large stocks leading the way, showing a gain of 0.5% and...
Forbes  Apr 16  Comment 
The best performing sector as of midday Thursday is the Financial sector, up 0.4%. Within that group, UnitedHealth Group Inc (NYSE: UNH) and Aetna Inc. (NYSE: AET) are two large stocks leading the way, showing a gain of 3.2% and 3.1%,...
Yahoo  Apr 16  Comment 
Duke, 65, will work with deal-makers who are focused on buying and investing in consumer products and retail companies at the firm in Washington, D.C., the Journal reported. Duke said his relationship with David Rubenstein, Carlyle co-founder and...
The Economic Times  Apr 16  Comment 
Samsung Electronics, Apple Inc. and Nestle S.A. retained the top spots in the list of Top 250 consumer product companies globally.
Forbes  Apr 15  Comment 
The worst performing sector as of midday Wednesday is the Services sector, up 0.1%. Within that group, Interpublic Group of Companies Inc. (NYSE: IPG) and Kroger Co. (NYSE: KR) are two of the day's laggards, showing a loss of 1.4% and 1.2%,...
TechCrunch  Apr 14  Comment 
 Box announced today in a blog post by CEO Aaron Levie, that the company had purchased Verold, makers of 3D viewer technology “With Verold’s technology, we’re extending our world-class content previewing and collaboration platform to...




 
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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