Sagging Staples

I’m usually a fan of Consumer Staples stocks. The reason is that they tend to have very stable financials. With sectors like homebuilders, even the best ones can see their profits and revenues soar from one year to the next. The Staples, by contrast, are far less hectic.

That’s why it’s such a surprise to me to see how weak Staples have been for the last two years. Check out this chart of the Staples divided by the S&P 500.

Notice how Staples led when the economy was falling apart. That’s the usual pattern. Staples lag when the economy is good, and they lead when things are bad. Apparently, things are good. Still, I’m surprised by how constant the trend has been.

Colgate, General Mills, Hershey, Kellogg, Kraft-Heinz, Pepsi and P&G are all at new 52-week lows today. These aren’t just ordinary stocks – these are some of the soundest names on Wall Street.

Posted by on May 2nd, 2018 at 11:38 am


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