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Forbes  Aug 28  Comment 
In afternoon trading on Thursday, Financial stocks are the worst performing sector, showing a 0.2% loss. Within that group, Prudential Financial (NYSE: PRU) and Legg Mason (NYSE: LM) are two large stocks that are lagging, showing a loss of 1.5%...
SeekingAlpha  Aug 27  Comment 
By David Trainer: The Consumer Staples sector ranks first out of the ten sectors as detailed in my Sector Rankings for ETFs and Mutual Funds report. It gets my Very Attractive rating, which is based on aggregation of ratings of 10 ETFs and 15...
The Hindu Business Line  Aug 27  Comment 
Kolkata-based McNROE Consumer Products Pvt Ltd, makers of the deodorant brand Wild Stone, on Thursday announced their foray into the “no gas” deodorant category with the launch of its perfume body...
Forbes  Aug 26  Comment 
Looking at the sectors faring worst as of midday Tuesday, shares of Utilities companies are underperforming other sectors, showing a 0.9% loss. Within the sector, Entergy (NYSE: ETR) and Ameren (NYSE: AEE) are two large stocks that are lagging,...
Financial Times  Aug 25  Comment 
Consumer M&A hit $271bn in value during the first seven months, the highest year-to-date figure since the height of the credit boom
Forbes  Aug 22  Comment 
In afternoon trading on Friday, Services stocks are the best performing sector, up 0.4%. Within that group, Ross Stores (NASD: ROST) and GameStop (NYSE: GME) are two of the day's stand-outs, showing a gain of 7.0% and 5.1%, respectively. Among the...
Market Intelligence Center  Aug 21  Comment 
After closing Wednesday at $44.87, Consumer Staples Select Sector SPDR (XLP) presents an attractive opportunity to get a 1.99% return in just 211 days, which is an annualized return of 3.45% (for comparison purposes only). To enter this trade,...
The Hindu Business Line  Aug 18  Comment 
FMGC major Godrej Consumer Products Ltd (GCPL) may consider setting up a new plant in Seemandhra, while continuing the expansion of the existing capacity of plants in North East and Jammu to meet...
Forbes  Aug 15  Comment 
Looking at the sectors faring best as of midday Friday, shares of Energy companies are outperforming other sectors, up 0.6%. Within that group, Kinder Morgan (NYSE: KMI) and EOG Resources (NYSE: EOG) are two large stocks leading the way, showing a...
DailyFinance  Aug 14  Comment 
Ronco Ready Grill Receives Third Place Award in Housewares Executive's Annual Innovation IssueCLEARWATER, FL -- (Marketwired) -- 08/14/14 -- Infusion Brands, Inc., a leading consumer product marketing company, operating under the public company...




 
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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