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
8/5/14 ADM Earnings Call 9am EST
8/5/14 IFF Earnings Call 10am EST
8/6/14 MDLZ Earnings Call 10am EST
8/6/14 TAP Earnings Call 11am EST
8/6/14 NUS Earnings Call 11am EST
8/7/14 THS Earnings Call 9am EST
8/7/14 LNCE Earnings Call 9am EST
8/7/14 MNST Earnings Call 5pm EST
8/8/14 POST Earnings Call 9am EST
Consumer Staples fell -2.9% week-over-week versus the broader market (S&P500) at -2.7%. XLP is up 1.1% year-to-date versus the SPX at 4.2%. XLP is the third worst performing sector in the ytd, ahead of Industrials (XLI) -0.9% and Consumer Discretionary (XLY) -1.8%.
Positive Divergence: SODA 9.2%; BG 8.6%; NWL 3.6%; REV 2.0%; ENR 1.1%
Negative Divergence: HLF -20.4%; SAFM -9.7%; KRFT -6.1%; TSN -6.3%; BNNY -6.2%
- SAM – Impressive Results Continue! 2H More Challenging
- LO – blu E-cig Sales -35% Drag Results
- RAI – Strong Pricing Offsets Volume Declines
- Just Charts - Into the Heart of Earnings Season
From a quantitative set-up XLP is broken over the immediate term TRADE and intermediate term TREND durations.
The Hedgeye U.S. Consumption Model shows 6 of the 12 U.S. Economic Indicators flashing green.
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 18.8x)
- 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 36.3 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 – bearish TREND = 110.43 resistance
DEO – bearish TREND = 124.67 resistance
KO – bearish TREND = 40.48 resistance
PEP – bullish TREND = 87.24 support
GIS – bearish TREND = 52.19 resistance
MDLZ – bearish TREND = 36.99 resistance
KMB – bearish TREND = 109.73 resistance
PG – bullish TREND = 79.22 support
MO – bearish TREND = 41.33 resistance
PM – bearish TREND = 84.22 resistance