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
8/11/14 DF Earnings Call 9am EST
8/11/14 SYY Earnings Call 10am EST
8/12/14 FLO Earnings Call 8:30am EST
8/14/14 VPCO Earnings Call 10:30am EST
8/15/14 EL Earnings Call 9:30am EST
Consumer Staples rose 0.9% week-over-week versus the broader market (S&P500) at 0.3%. XLP is up 2.1% year-to-date versus the SPX at 4.5%. XLP is the third worst performing sector in the ytd, ahead of Industrials -0.2% (XLI) and Consumer Discretionary -0.7% (XLY).
Positive Divergence: SAM 6.7%; MNST 6.5%; SMG 5.9%; THS 5.4%; TAP 5.2%
Negative Divergence: NUS -18.7%; POST -16.7%; IFF -3.4%; SODA -3.2%; ENR -2.2%
- K: Repeatable Pattern
- BNNY: This Will Be Ugly
- On Earnings Score Card Consumer Staples is Dead Last!
- Invite: Inside the Organic Food Industry & New Best Idea Call
- Just Charts – The Move Lower
From a quantitative set-up XLP is broken its immediate term TRADE duration and bullish over the intermediate term TREND duration.
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 19.2x)
- 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 36.2 versus 36.3 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 resistance = 110.04
DEO – bearish TREND resistance = 125.48
KO – bearish TREND resistance = 40.66
PEP – bullish TREND support = 87.71
GIS – bearish TREND resistance = 52.68
MDLZ – bearish TREND resistance = 37.03
KMB – bearish TREND resistance = 109.95
PG – bullish TREND support = 79.40
MO – bullish TREND support = 40.59
PM – bearish TREND resistance = 84.78