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Consumerstaples

Consumer staples look poised to outperform this earnings seasonWe've now had five early earnings reports from the consumer staples sector in the last couple weeks, including today's reports from General Mills and Constellation Brands. On average, EPS for these companies beat analyst estimates by 12.5%, revenue beat by over 3%. That suggests that analysts have underestimated both demand and profit margins for this sector in Q2. I think we'll see strong performance from the sector as we head into the July earnings season. The risk for this sector is that companies won't issue guidance for Q3. We've already seen weak post-earnings stock reactions from Kroger and General Mills as a result of their failure to issue guidance. In addition to earnings outperformance in Q2, consumer staples may benefit from any news of economic "reclosing" as we go into Q3. Bank of America reported today that "The percent of businesses open relative to the baseline (pre-covid) levels has stalled at around -20% to -21% and the number of hourly employees working remains down around 23%-24%." Likewise, Goldman Sachs "calculates that 40% of the US has now reversed or placed reopening on hold." If consumers continue to stay home, then consumer staples sales will remain strong in Q3.
AMEX:RSPSLong
by ChristopherCarrollSmith
Wrong-way earnings play on Kroger offers opportunity to buyKroger reported blow-out earnings and sales today, handily beating both the Wall Street and Estimize consensuses. The stock is moving down, however, perhaps because this quarter's earnings were a blip and next quarter's earnings are expected to be in a more normal range. I could see the stock selling off over the next month or so as the "Covid-19 bump" goes away. However, some increased demand will remain over the next few quarters as consumers remain too scared to eat at restaurants. Next quarter's estimates are lower than the current quarter, but still quite a bit higher than 2019 YoY. Also, Kroger's increased cash flow this quarter will get reinvested into the business, leading to higher earnings in the future. Based on Zacks estimates of Kroger earnings for 2021, I estimate the stock's fair value at around $37 per share. We've got a support around $31 per share today, but the reality is that we probably will break that support and continue downward toward the volume support at $28.50. And since it's the slow season, I wouldn't even be surprised to see Kroger hit secondary volume support at $25. I will be scaling in as the stock falls, because I think Kroger is an attractive, dividend-paying investment for a recessionary environment.
NYSE:KR
by ChristopherCarrollSmith
6
ridethepig | Consumer Staples (Chapter 2)The following diagram illustrates the breakup of a globalisation advance: Since the retrace in VIX has found a hard floor into the 25 lows, we may characterise the advance as an endgame for our economic cycle purposes. Now the erroneous nature of Volatility advancing can be seen. The effect of demobilising the consumer will weigh heavy on Equities, not to mention how companies position capital more defensively going forward. Consumers are uncomfortable (at least from Q3/Q4 onwards) right on time for the stimulus to fade. The following swing, which will also be quoted in the previous leg in DAX is another example. I will go over the flows briefly at this point: Equities have now lost all sense of reality, the concussion in addition to Fed conceding far too much mobility; so this may rightfully be classified as the end of an economic cycle, or at least until capitalism returns from its sabbatical.
AMEX:XLPShort
by ridethepig
4
A few opportunities are emerging for long-side tradersConsumer staples have sold off along with the rest of the market, but if grocery store shelves are any indication, this sector should have a pretty good quarter. With people eating out less and eating at home more, expect several months of strong demand and good free cash flow in this sector. RHS looks to me to be finding support, and the big volume spike today implies that we've possibly reached a reversal level. Now that the news environment around travel bans and quarantines has settled somewhat and we know what the next month or so will look like, I'm starting to see signs of divergence between the winners and the losers. There's going to be a lot of stock picking and a lot of attention to sector-specific economic data and company-specific guidance and financials. There are starting to be a few reasonable long plays, including consumer staples (RHS), video games (ATVI), streaming services (NFLX), direct-to-consumer shippers (FDX, UPS), and remote working software (CSCO).
AMEX:RSPSLong
by ChristopherCarrollSmith
3
Interesting divergence SPY/XLYI was messing around with my charts and noticed that SPY and XLY (Consumer Discretionary) are diverging. Looking back in time - with the exception of one littler divergence a couple years ago - I can't find anywhere else this has happened. Is this maybe a sign that the consumer is getting overly confident? When fear is turned off, things eventually get out of control. The other thing I noticed is that XLP (Consumer Staples) is gapping away from SPY and XLY to the upside. Guess when the last time XLP gapped away from SPY and XLY?? Yep, you guessed it! It was last year right before the market tanked. This would also (maybe) be a sign that consumers are getting overly confident.
AMEX:SPYShort
by Bankuur
XLP 200MA Trade and Seasonal DefensiveXLP has bounced off the 200MA. The last two moves pushed slightly through it, like this one, and the subsequent ramp was at least to the previous high (Feb-Mar) if not higher (Jan). The 2018 price/action below the MA shows this stock does take that indicator into account. The recovery looks to be finishing the final sub-wave of W3. March shows a slight pullback, so entering at 57 with a 1% stop (56.45) and a target of 59 (Jan 18 ATH) gives an RR of 3.64. XLP is of course a seasonal defensive.
AMEX:XLPLong
by adatherton
General Mills Upside Breakout CatalystsGeneral Mills reports earnings Wednesday and should stay above the trendline in the meantime. It has positive analyst ratings and a positive earnings surprise expectation from Zacks. It may even break upward out of its parallel channel sometime in the next two trading days in anticipation of positive earnings, but at the very least I expect it to stay at the top of the channel. It's then likely to report an earnings beat Wednesday and enjoy a nice pop to establish a new upward trend channel.
NYSE:GISLong
by ChristopherCarrollSmith
1
Increase All Prices DiscretelyConsolidate 2 $48.64;Test ATH 4 Breakout New Rev Bonus; Consumers Volume Same KO - Coca Cola announced at ER that prices of all products were quietly increased. Historically, consumer spending on their products does not decrease with product price fluctuation Positive Long Term Fundamental Catalyst for Potential Increase in Revenues Consumer's Play historically safety play through market turmoil, and positive if economic spending is up. Long Term Swing Potetial if Resistance/Fibonacci Breakout past $48.64 range
NYSE:KOLong
by tekmunnee
Newell Brands up 23% on heavy volume and recommended buyingNewell Brands, a high-profile consumer products brand owner, is up just above 786fibretracement on breakout volume. About: Newell Brands Inc. is a marketer of consumer and commercial products. The Company's segments include Writing, Home Solutions, Commercial Products, Baby & Parenting, Branded Consumables, Consumer Solutions, Outdoor Solutions and Process Solutions. Its products are marketed under a portfolio of brands, including Paper Mate, Sharpie, Dymo, Expo, Parker, Elmer's, Coleman, Jostens, Marmot, Mr. Coffee, Rubbermaid Commercial Products, Graco, Baby Jogger, NUK, Calphalon, Rubbermaid, Contigo, First Alert and Yankee Candle. Writing segment consists of the Writing and Creative Expression business. Monday will likely be a slightly down day, so get in below 18.39 on limit order and solid long hold with 5.5% dividend yield, which has an 8.9% growth rate the last 5-years. Div. payout is typically the 2nd week of Nov. and likely why the jump today. Or buy-in at market and set some for low buy-in.
NLong
by Pokethebear
How much will overbought Consumer Non-Cyclical Sector Fall? XLPThe Consumer Non-Cyclical Sector SPDR Fund has been in a bull trend since the end of the financial crisis. An internal and stronger bull trend has taken shape since shortly after the US elections in November 2016. However, this fund is currently near its long-term resistance point which will most likely lead to one of two future moves. The fund could break above this long-term resistance and continue strong gains, or it could reverse course and at the very least return to its support established since the election. Below I have laid out the reasons and levels to which the fund may dip while it continues its overall bull trend. When we take a look at technical indicators, the relative strength index (RSI) is at 80.8116. RSI tends to determine trends, overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. Currently the RSI is overbought. The fund could rise over the next few days or begin its descent now. I will provide further analysis below when this indicator aligns at maximums with two of the other technical indicators. The true strength index (TSI) is currently 21.5180. The TSI determines overbought/oversold levels and/or current trend. I solely use this as an indicator of trend as overbought and oversold levels vary. The TSI is double smoothed in its calculation and is a great indicator of upward and downward movement. The TSI is moving up. The positive vortex indicator (VI) is at 1.3859 and the negative is at 0.5248. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. These indicators are at extreme levels indicating a pending reversal of the fund is imminent. I will provide further analysis below when this indicator aligns at maximums with two of the other technical indicators. The stochastic oscillator K value is 97.0441 and D value is 94.0369. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals and short-term activity. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the stock is trending up. When the D value is higher that the K value the stock is trending down. The stochastic is currently well overbought, but the D value has not overtaken the K value, meaning the fund could produce gains for one or two more days at the most before ultimately turning downward. I will provide further analysis below when this indicator aligns at maximums with two of the other technical indicators. On three occasions since September 2013, the RSI, positive VI, and stochastic have been at similarly extreme levels at the same time. All three occasions led to drops for the fund. In September 2013 the fund dropped 5.25% in 13 trading days. In October 2013 the fund lost 2.91% over the next 35 trading days. Eventually the fund dropped more than 7% from the October RSI peak (the bottom occurred at the end of January 2014). The smallest decline was seen in February of this year when the fund declined 1.63% over 22 trading days. A natural decline will occur in our current instance, the main question is how much? Considering the RSI, TSI, VI and stochastic levels, the overall direction favors a move to the downside. Based on historical movement compared to current levels and the current position, the fund could drop at least 1.63% over the next 25 trading days if not
AMEX:XLP
by StockSignaler