RECENT NEWS
The Economic Times  Aug 22  Comment 
Sell Godrej Consumer Products Ltd. at a price target of Rs 1530.0 and a stop loss at Rs 1575.0 from entry point
The Hindu Business Line  Aug 21  Comment 
“In inorganic growth, emphasis is on Godrej Consumer Products Ltd and Godrej Agrovet. Of course other businesses also have inorganic growth, but these are the two major ones.”
Forbes  Aug 19  Comment 
The best performing sector as of midday Friday is the Technology & Communications sector, up 0.4%. Within the sector, Applied Materials, Inc. (NASD: AMAT) and Micron Technology Inc. (NASD: MU) are two large stocks leading the way, showing a gain...
Forbes  Aug 18  Comment 
Unless you’re a consumer investor, entrepreneur or retailer, you’re likely spared from these consumer products tradeshows, which are the biggest and best in the industry.
The Economic Times  Aug 18  Comment 
In a challenging macro environment in most of the geographies of its operations, Godrej Consumer clocked 9 per cent sales growth in both its domestic and international businesses.
Forbes  Aug 16  Comment 
Looking at the sectors faring best as of midday Tuesday, shares of Energy companies are outperforming other sectors, up 0.4%. Within that group, Chesapeake Energy Corp. (NYSE: CHK) and Kinder Morgan Inc. (NYSE: KMI) are two of the day's...
Forbes  Aug 15  Comment 
Looking at the sectors faring worst as of midday Monday, shares of Utilities companies are underperforming other sectors, showing a 1.1% loss. Within that group, Consolidated Edison Inc (NYSE: ED) and PPL Corp (NYSE: PPL) are two large stocks that...
The Economic Times  Aug 12  Comment 
Revenue from consumer products division stood at Rs 547.78 crore during the first quarter as compared with Rs 593.04 crore in the same period a year ago.
Forbes  Aug 10  Comment 
The best performing sector as of midday Wednesday is the Consumer Products sector, higher by 0.4%. Within that group, Ralph Lauren Corp (NYSE: RL) and HanesBrands Inc (NYSE: HBI) are two large stocks leading the way, showing a gain of 9.7% 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.

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