RECENT NEWS
Wall Street Journal  Jul 25  Comment 
Huawei' s sales of smartphones and other consumer products rose 30% in the first half of this year. The company said its strategy of focusing more on mid- to high-end smartphones, rather than selling the cheapest phones on the market, is working...
Forbes  Jul 24  Comment 
The best performing sector as of midday Thursday is the Consumer Products sector, higher by 0.6%. Within that group, Under Armour (NYSE: UA) and Dr Pepper Snapple Group (NYSE: DPS) are two of the day's stand-outs, showing a gain of 13.4% and 5.1%,...
Forbes  Jul 23  Comment 
Looking at the sectors faring worst as of midday Wednesday, shares of Technology & Communications companies are underperforming other sectors, showing a 0.8% loss. Within the sector, Xilinx (NASD: XLNX) and Juniper Networks (NYSE: JNPR) are two...
Forbes  Jul 22  Comment 
The worst performing sector as of midday Tuesday is the Utilities sector, higher by 0.1%. Within that group, Entergy (NYSE: ETR) and NRG Energy (NYSE: NRG) are two large stocks that are lagging, showing a loss of 1.1% and 0.9%, respectively. Among...
Forbes  Jul 21  Comment 
The worst performing sector as of midday Monday is the Consumer Products sector, showing a 0.4% loss. Within that group, Monster Beverage (NASD: MNST) and Yum! Brands (NYSE: YUM) are two large stocks that are lagging, showing a loss of 3.8% and...
DailyFinance  Jul 21  Comment 
mPower Technologies Inc. (http://mpowertech.com/), the consumer products subsidiary of mPhase Technologies, Inc. (XDSL), announced today they are introducing the third product offering in their portable jumpstarter line of...
The Hindu Business Line  Jul 20  Comment 
The Crompton Greaves stock moved up 14 per cent on Thursday. The trigger for the jump is the board’s proposal to demerge the consumer products business into a separate listed company. The investor...
The Hindu Business Line  Jul 17  Comment 
Crompton Greaves said that its board of directors at the annual strategic review meeting on July 16 in Belgium proposed to demerge its consumer products business unit into a separate listed compan...
Forbes  Jul 16  Comment 
The worst performing sector as of midday Wednesday is the Healthcare sector, showing a 0.1% loss. Within the sector, Express Scripts Holding (NASD: ESRX) and Gilead Sciences, (NASD: GILD) are two of the day's laggards, showing a loss of 3.2% and...
Forbes  Jul 15  Comment 
The worst performing sector as of midday Tuesday is the Consumer Products sector, showing a 0.8% loss. Within the sector, Lorillard (NYSE: LO) and Reynolds American (NYSE: RAI) are two large stocks that are lagging, showing a loss of 9.5% and...




 
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.

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki