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.

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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

 

WEEK-OVER-WEEK PERFORMANCE

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%

RECENT NOTES 

From a quantitative set-up XLP is broken its immediate term TRADE duration and bullish over the intermediate term TREND duration.

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The Hedgeye U.S. Consumption Model shows 6 of the 12 U.S. Economic Indicators flashing green.

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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

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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 – bearish TREND resistance = 110.04

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DEO – bearish TREND resistance = 125.48

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KO – bearish TREND resistance = 40.66

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PEP – bullish TREND support = 87.71

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GIS – bearish TREND resistance = 52.68

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MDLZ – bearish TREND resistance = 37.03

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KMB – bearish TREND resistance = 109.95

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PG – bullish TREND support = 79.40

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MO – bullish TREND support = 40.59

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PM – bearish TREND resistance = 84.78

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Howard Penney

Managing Director

Matt Hedrick

Associate

Fred Masotta

Analyst