Forbes  Sep 22  Comment 
Looking at the sectors faring best as of midday Thursday, shares of Healthcare companies are outperforming other sectors, higher by 0.8%. Within the sector, Perrigo Company plc (NYSE: PRGO) and Mylan NV (NASD: MYL) are two of the day's stand-outs,...
The Economic Times  Sep 20  Comment 
As per the deal announced in May, Piramal Enterprises' consumer products division entered into an agreement to acquire four brands from Pfizer Ltd for a consideration of Rs 110 cr.
Motley Fool  Sep 15  Comment 
We'll examine what constitutes a consumer-staples stock, and a few of the most attractive names in this high-profile defensive sector today.
Forbes  Sep 15  Comment 
The worst performing sector as of midday Thursday is the Consumer Products sector, higher by 0.5%. Within that group, VF Corp. (NYSE: VFC) and Reynolds American Inc (NYSE: RAI) are two large stocks that are lagging, showing a loss of 2.8% and...
The Economic Times  Sep 15  Comment 
Buy Godrej Consumer Products Ltd. at a price target of Rs 1685.0 and a stop loss at Rs 1640.0 from entry point
New York Times  Sep 15  Comment 
The layoffs, while small given Disney’s sheer size, have followed a pattern in recent months as the company tries to move fast to control costs.
Yahoo  Sep 14  Comment 
M&As just got more interesting with the announcement that Bayer (BAYRY) is paying $66 billion for Monsanto (MON). Wednesday’s deal was important for two reasons, according to Greg Portell, a partner with management consulting firm A.T. Kearney...
Forbes  Sep 13  Comment 
The best performing sector as of midday Tuesday is the Consumer Products sector, losing just 1.4%. Within that group, Hormel Foods Corp. (NYSE: HRL) and McCormick & Co., Inc. (NYSE: MKC) are two large stocks leading the way, with HRL showing a...
The Hindu Business Line  Sep 13  Comment 
The Indian Foundation of Transport Research and Training (IFTRT) has called on the government to ensure that the GST Council sets up an enlarged tariff commission to scrutinise the pricing structure ...


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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