Technical analysis, with tools like moving averages, Relative Strength Index (RSI) and support and resistance levels, further enriches the evaluation process. Moving averages identify trends, with an upward trend indicating a positive trajectory. The RSI measures the speed and magnitude of price movements, providing insights into potential overbought or oversold conditions.
Owning consumer staples could also become challenging if policy tightening coincides with organically slowing growth and inflation. Consumer staples are a good way to own cash flows that correlate well with this level of spending in the real economy. Consumer staples play a vital role in the overall economy and have a significant xm group impact on the Gross Domestic Product (GDP). The GDP is a measure of the total value of goods and services produced within a country over a specific period. The S&P/NZX Emerging Opportunities Index has a meaningfully different size profile compared with the existing S&P/NZX size indices and the S&P/NZX 50 Index.
Consumers generally buy these products regardless of their financial situation or economic stability. One of the primary reasons is that consumer staples are considered essential products that people need regardless of economic conditions. Consumer staple companies are less likely to be affected by economic downturns than companies that produce nonessential products. As a result, these companies may provide more stable and reliable earnings even during challenging economic times. Consumer staple stocks create a “defensive position” in your stock portfolio, which helps to stabilize your entire portfolio during market volatility.
- These companies typically have a history of paying dividends, often considered reliable and sustainable.
- Owning equities that can correlate better with inflation, like consumer staples, is just one step.
- Procter & Gamble is a consumer goods company that makes everything from personal hygiene products to detergents, cleaners and other household products.
- Since the demand for consumer staples doesn’t slow even in a weak economy, the sector is noncyclical.
- According to the S&P Dow Jones Indices, for most of the 10 years ending April 26, 2021, the consumer staples sector returned 8.20% annually.
There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data. Kimberly Ellis is a personal finance writer at Finder, specializing in banking and financial literacy. After teaching in public and private schools, Kimberly zeroed in on personal financial education to help families and kids develop lifelong money skills. She hails from New York City, graduating summa cum laude from Queens College with a BA in elementary education and mathematics, as well as a New York State teaching certificate. She’s also an aspiring polyglot, always in a book and forever on the hunt for the perfect classic red lipstick. Use the graph below to track how the Consumer Staples Select Sector SPDR ETF (XLP) has been performing over the past three months, year and five years.
But with cash and bond yields at close to zero and real yields on quality bonds negative in most of the developed world, it doesn’t make a lot of sense to own these. In our earlier example of tobacco, their easymarkets review earnings are hit 17 to 37 percent running unemployment from 10 to 20 percent. This means you need very large declines in interest rates to offset the lost income to get a bottom in their share prices.
Advantages of Investing in Consumer Staples Stocks
For example, soft drink companies Coca-Cola (), Keurig Dr Pepper (), and PepsiCo () have generally experienced strong pricing power due to a lack of competitive private-label alternatives. Dock David Treece is a former licensed investment advisor and member of the FINRA Small Firm Advisory Board. His focus is on breaking down complex financial topics so readers can make informed decisions. PG is one of the biggest employers in Cincinnati, Ohio, where it has its headquarters. With an annual marketing budget of $11.5 billion, it also holds the title of the world’s largest advertiser. Walmart is the world’s largest retailer, the world’s largest company by revenue and the largest employer, with over 2.2 million employees as of 2020.
So you still want to be diversified across a number of stocks within the consumer staples sector and other types of stocks as well. Among the hardest-hit segments was packaged foods and meats, a competitive industry due to the presence of lower-priced private-label alternatives. As input costs eased, brand-name food companies stepped up discounts and advertising spending to attempt to gain market share. Investor sentiment also shifted against this segment due to worries about how new weight-loss drugs might impact demand. Certain segments of the consumer discretionary sector, especially retailers, are ripe targets for disruption by new e-commerce competitors.
Household product companies
While Altria Group currently has a “Hold” rating among analysts, top-rated analysts believe these five stocks are better buys. © 2024 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see Barchart’s disclaimer.
What is the difference between consumer staples and consumer discretionary?
Start by making a list of the companies that operate in the consumer staples sector or viewing a pre-compiled list like this one by MarketBeat. Look for the companies that produce and distribute essential consumer goods that you believe will be continued staples. The consumer staples sector divides into multiple sub-sectors depending on the products the company produces. Here are some of the largest subdivisions of the consumer sector and some of the major players in each industry. These products are essential for maintaining a clean and healthy home, and people consume them regularly.
As depicted in Exhibit 2, the weighted average total market cap of the index is less than one-third that of the S&P/NZX MidCap Index and more than double that of the S&P/NZX SmallCap Index. Unsurprisingly, it is far smaller than itrader review the S&P/NZX 50 Index or S&P/NZX 20 Index, which are heavily weighted to the largest New Zealand companies. The eligible universe is defined as constituents of the S&P/NZX All Index that are not members of the S&P/NZX 20 Index.