By:
Shane Connor
Josh Drushel
Jessica Kirwin
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1. Size and Composition
2. Business Analysis
3. Economic Analysis
4. Financial Analysis
5. Valuation Analysis
6. Recommendation
7. Q&A
Materials; 3.2%
Consumer Utilities; 4.1%
Discretionary ;9.0%
Telecom; 3.5%
Consumer Staples;
12.0%
Information
Technology; 18.3%
Energy; 12.4%
Industrials; 9.9%
Financials; 13.6%
Health Care; 14.0%
Personal Products
2.0%
Tobacco
13.5%
Food Products
16.1%
Beverages
21.5%
Food & Staples
Retailing
24.4%
Household
Products
22.6%
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Wal-mart Stores, Inc. – $189.2 B
The Proctor & Gamble Co. - $161.8 B
The Coca-Cola Co. – $117.1 B
PepsiCo, Inc. – $86.8 B
Philip Morris International Inc. – $85.9 B
CVS Caremark Corp. – $48.1 B
Kraft Foods Inc. – $40.5 B
Colgate-Palmolive Co. – $36.7 B
Altria Group, Inc. – $35.6 B
Walgreen Co. – $30.0 B
Market Cap as of 7/20/09
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Stable demand
 Multinational companies
Defensive (non-cyclical)
 Consistent growth and returns
 Generally lags the market during periods of
growth
Shift toward international expansion
International
Domestic
Colgate-Palmolive Revenue in millions
Region
2008
2007
2006
Avg. Growth Rate
North America
2851.7
2720.8
2590.8
4.87%
Latin America
4088.0
3488.9
3019.5
16.35%
Europe
3582.7
3383.3
2952.3
10.24%
Asia
2660.0
2337.6
2006.0
15.16%
Inelastic demand
- Consumer staples generally remain steady during rough
economic times but lag during expansion.
Relatively steady demand in the United States
Large growth internationally
Competition is very high within sector
-Due to many established competitors
- Can compete on price and cost cutting
- Product differentiation
Buyer Power – (High)
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Many substitutes readily available
Low switching costs
Supplier Power – (Low)
-
Due to the many substitutes available
Cost of entry is very high
- Dominated by very large multinational firms
- High capital requirements to enter
- Brand loyalty can be hard to break
- Most of the businesses have been established for
decades and in some cases even centuries
Foreign exchange rates
Balance of trade
GDP
Unemployment Rate
Inflation
Source: Charles Schwab
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Telecommunication Services
Utilities
Cash
S&P 500
Weight
8.97%
SIM
Weight
7.50%
+/-1.46%
12.32%
12.36%
0.04%
12.05%
10.68%
-1.37%
13.70%
9.33%
-4.37%
14.06%
13.58%
-0.49%
9.79%
11.57%
1.78%
18.43%
20.19%
1.76%
3.20%
4.12%
0.92%
3.39%
3.28%
-0.11%
4.10%
3.87%
-0.23%
0.00%
3.53%
3.53%
100.00%
100.00%
0.00%
As of 7/14/2009
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Increase weight of Consumer Staples by 25 basis
points
 Economic outlook is uncertain
 Defensive position
 Stable, Long term returns
 International growth increasing
 If dollar devalues, more favorable position