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The Economic Times  9 hrs ago  Comment 
After surging 4.17 per cent to Rs 1,360 intra-day, shares of the company finally ended at Rs 1,335, up 2.26 per cent on BSE.
Market Intelligence Center  Aug 28  Comment 
Consumer Staples Select Sector SPDR (XLP) traded between $46.87 and $47.89 before closing at $47.74 Thursday and presents some attractive trading opportunities today. MarketIntelligenceCenter.com's algorithms have picked a Jan. '16 $47.00 covered...
Forbes  Aug 26  Comment 
Rovio Entertainment begin employee negotiations on up to 260 redundancies in effort to "restructure and concentrate its activities" on games, media and consumer products.
MarketWatch  Aug 26  Comment 
Maker of Angry Birds to focus on games, media and consumer products.
Forbes  Aug 24  Comment 
HTC's product strategy makes little sense, and the company's financial performance is suffering for it. As investors in the consumer products and retail space, one of the most important questions you have to ask the management teams is, "What are...
Forbes  Aug 21  Comment 
Looking at the sectors faring worst as of midday Friday, shares of Services companies are underperforming other sectors, showing a 1.7% loss. Within the sector, Ross Stores, Inc. (NASD: ROST) and Netflix Inc. (NASD: NFLX) are two large stocks that...
Forbes  Aug 18  Comment 
Looking at the sectors faring best as of midday Tuesday, shares of Consumer Products companies are outperforming other sectors, not showing much of a loss. Within that group, Estee Lauder Cos., Inc. (NYSE: EL) and Coach, Inc. (NYSE: COH) are two...
Forbes  Aug 17  Comment 
Looking at the sectors faring worst as of midday Monday, shares of Consumer Products companies are underperforming other sectors, up 0.2%. Within the sector, Estee Lauder Cos., Inc. (NYSE: EL) and Ford Motor Co. (NYSE: F) are two large stocks that...




 
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.

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