Forbes  Jun 19  Comment 
From the time they learn the basics of investing as university students, professional portfolio managers are taught that some sectors such as technology and industrials are risky and cyclical, rising and falling in lockstep with macro factors....
Forbes  Jun 18  Comment 
Looking at the sectors faring best as of midday Thursday, shares of Healthcare companies are outperforming other sectors, up 1.3%. Within the sector, Celgene Corp. (NASD: CELG) and Endo International plc (NASD: ENDP) are two large stocks leading...
Forbes  Jun 16  Comment 
In afternoon trading on Tuesday, Consumer Products stocks are the best performing sector, higher by 0.9%. Within the sector, Monster Beverage Corp (NASD: MNST) and Campbell Soup Co. (NYSE: CPB) are two of the day's stand-outs, showing a gain of...
Market Intelligence Center  Jun 15  Comment 
Consumer staples stocks benefit from the space’s defensive attributes in a volatile market environment. The sector’s operating environment has also improved, but there is no shortage of issues either. Consumer spending remains anemic despite...
Forbes  Jun 11  Comment 
The worst performing sector as of midday Thursday is the Energy sector, showing a 0.6% loss. Within that group, Transocean Ltd. (NYSE: RIG) and Diamond Offshore Drilling, Inc. (NYSE: DO) are two large stocks that are lagging, showing a loss of...
Market Intelligence Center  Jun 11  Comment 
After a tough ride in 2014, the consumer staple sector had a good start to 2015 on the back of moderate economic recovery, better job prospects, improved business and renewed optimism as a result of the housing recovery. Rising wages and cheaper...  Jun 11  Comment 
LONDON (dpa-AFX) - PZ Cussons Plc. (PZC.L), a consumer products group, Thursday said its performance for the year ended May 31 has been in line with expectations. In a trading update for the year ended May 31, the company said its...
Channel News Asia  Jun 10  Comment 
The Consumer Care Competence Centre is aimed at consumer products companies specialising in personal and home care products to help them better meet consumer trends. 


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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