Just Charts - Into the Heart of Earnings Season

INVESTMENT IDEAS

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.

 

Just Charts - Into the Heart of Earnings Season - z. idesa

EVENTS THIS WEEK

7/28/14 TSN Earnings Call 8am EST

7/29/14 RAI Earnings Call 9am EST

7/29/14 HLF Earnings Call 11am EST

7/30/14 SODA Earnings Call 8:30am EST

7/30/14 REV Earnings Call 9:30am EST

7/30/14 ENR Earnings Call 10am EST

7/30/14 KRFT Earnings Call 5pm EST

7/30/14 SAM Earnings Call 5pm EST

7/31/14 NWL Earnings Call 8am EST

7/31/14 AVP Earnings Call 9am EST

7/31/14 K Earnings Call 9:30am EST

7/31/14 CL Earnings Call 11am EST

8/1/14 PG Earnings Call 8:30am EST

8/1/14 CHD Earnings Call 10am EST

8/1/14 CLX Earnings Call 1:15pm EST

 

 

WEEK-OVER-WEEK PERFORMANCE

Consumer Staples fell -0.9% week-over-week versus the broader market (S&P500) flat.  XLP is up 4.2% year-to-date versus the SPX at 7.0%.

 

Positive Divergence:  HLF 8.6%; SODA 7.1%; DPS 3.5%; HAIN 3.1%; MJN 2.2%

Negative Divergence:  TUP -11.6%; DF -8.0%; KMB -4.2%; RAI -3.1%; CLX -3.0%

RECENT NOTES 

 From a quantitative set-up XLP broke its immediate term TRADE duration last week and is now bearish, while the intermediate term TREND duration remains bullish.

 Just Charts - Into the Heart of Earnings Season - 2

 

The Hedgeye U.S. Consumption Model shows 7 of the 12 U.S. Economic Indicators flashing green.

 Just Charts - Into the Heart of Earnings Season - 3

 

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 19.3x)
  • 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, but rose to 37.6 versus 37.5 in the prior week

Just Charts - Into the Heart of Earnings Season - 4

Just Charts - Into the Heart of Earnings Season - 5

Just Charts - Into the Heart of Earnings Season - 6

 

QUANTITATIVE SETUP

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 support = 110.07

Just Charts - Into the Heart of Earnings Season - 7

 

DEO – bearish TREND resistance = 126.32

Just Charts - Into the Heart of Earnings Season - 8

 

KO – bullish TREND support = 40.88

Just Charts - Into the Heart of Earnings Season - 9

 

PEP – bullish TREND support = 88.15

Just Charts - Into the Heart of Earnings Season - 10

 

GIS – bullish TREND support = 52.44

Just Charts - Into the Heart of Earnings Season - 11

 

MDLZ – bullish TREND support = 36.99

Just Charts - Into the Heart of Earnings Season - 12

 

KMB – bearish TREND resistance = 110.91

Just Charts - Into the Heart of Earnings Season - 13

 

PG – bearish TREND resistance = 80.31

Just Charts - Into the Heart of Earnings Season - 14

 

MO – bullish TREND support = 40.41

Just Charts - Into the Heart of Earnings Season - 15

 

PM – bearish TREND resistance = 86.11

Just Charts - Into the Heart of Earnings Season - 16

 

Howard Penney

Managing Director

 

Matt Hedrick

Associate

 

Fred Masotta

Analyst

 

 


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