The table below lists our current investment ideas as well as a list of potential ideas we are in the process of evaluating (watch list). We intend to update this table regularly and will provide detail on any material changes.
EVENTS THIS WEEK
7/21/14 CPB Investor Day 12:30pm EST
7/22/14 MO Earnings Call 9am EST
7/22/14 MJN Earnings Call 9am EST
7/22/14 KO Earnings Call 9:30am EST
7/22/14 KMB Earnings Call 10am EST
7/23/14 PEP Earnings Call 8am EST
7/23/14 TUP Earnings Call 8:30am EST
7/24/14 JAH Earnings Call 8:30am EST
7/24/14 HSY Earnings Call 8:30am EST
7/24/14 CCE Earnings Call 10am EST
7/24/14 DPS Earnings Call 11am EST
Consumer Staples fell -0.1% week-over-week versus the broader market (S&P500) up +0.5 %. XLP is up 5.2% year-to-date versus the SPX at 7.0%.
Positive Divergence: EL 2.1%; SMG 1.3%; KO 1.1%; CCE 0.9%; DF 0.9%
Negative Divergence: NUS -10.6%; BNNY -6.6%; LO -6.6%; HLF -5.7%; RAI -5.0%
- Replay Ballantyne Brands Expert Call - Are Vaporizers Stealing Share from Big Tobacco
- PM – Strong Q2; Rich Valuation Supported Over Long Term
- Removing Long LO from Best Ideas List
- Just Charts - Bullish Summer Charts
XLP remains bullish on immediate term TRADE and intermediate term TREND durations from a quantitative set-up.
The Hedgeye U.S. Consumption Model shows 7 of the 12 U.S. Economic Indicators flashing green.
Despite the bullish quantitative set-up for the sector, we continue to believe that the group is facing numerous headwinds, including:
- U.S. consumption growth is slowing as inflation rises, in-line with the Macro team’s 1Q14 theme of #InflationAccelerating, Q2 2014 theme of #ConsumerSlowing, and Q3 2014 theme of #Q3 Slowing
- The economies and currencies of the emerging market – once the sector’s greatest growth engine – remain weak with the prospect of higher inflation in 2014 eroding real growth
- The sector is loaded with a premium valuation (P/E of 19.6x)
- Less sector Yield Chasing as Fed continues its tapering program
- The high frequency Bloomberg weekly U.S. Consumer Comfort Index (rescaled for cosmetic and not component reasons) has not seen any real improvement over the past 6 months, and fell to 37.5 versus 37.6 in the prior week
In the charts below we look at the largest companies by market cap in the Consumer Staples space from a quantitative perspective.
BUD - bullish TREND w/ 109.97 support
DEO – bearish TREND w/ resistance = 126.49
KO – bullish TREND support = 40.92
PEP – bullish TREND support = 86.88
GIS – bullish TREND support = 52.39
MDLZ – bullish TREND support = 36.52
KMB – bullish TREND support = 110.41
PG – bullish TREND support = 79.71
MO – bullish TREND support = 40.52
PM – bullish TREND support = 84.15