Consumer Staples
Daiyuan “Derry” Deng
Botao “Ray” Duan
Adam Gough
 The Consumer Staples Sector comprises companies whose
businesses are less sensitive to economic cycles
 Manufacturers and distributors of food, beverages and tobacco
 Producers of non-durable household goods personal products
 Food & drug retailing companies
 Hypermarkets and consumer super centers
$1490.9 billion
Market Cap of the Sector
as % of S&P 500
10.65%
Industries
Soft Drinks
Food Retail
Household Products
Personal Products
Tobacco
Distillers & Vintners
Packaged Foods & Meats
Brewers
Hyper Markets & Super Centers
Agricultural Products
Drug Retail
Food Distributors
Top 5 Holdings
Industry
MKT Cap
Sector weight
Procter & Gamble
Household
Products
209.8 Billion
14.07%
Coca-Cola Co
Soft Drinks
178.8 Billion
12.00%
Philip Morris
International
Tobacco
152.3 Billion
10.22%
Wal-Mart Stores
Hyper Markets &
Super Centers
249.9 Billion
16.76%
Altria Group
Tobacco
68.2 Billion
4.57%
 Performance Data (as of 21-Mar-2013 )
YTD
3 Year
5 Year
Consumer Staples
12.43%
43.49%
42.49%
S&P 500
8.80%
33.11%
14.69%
Source: http://www.standardandpoors.com/indices/sp-500/en/eu/?indexId=spusa-500-usduf--p-us-l--
 Overweight S&P 500 by 1.70%
Source: SIM Portfolio Appraisal - January 2013
 Consumer Staples are relatively non-cyclical.
 People tend not to decrease daily living expense.
 Consumer staple industry tends to be less sensitive to
economic cycles.
 Investment opportunities during late stage of a bull markets.
 Barging Power of Customers: Low
 Barging Power of Suppliers: Moderate/Low
 Threat of new entrants: Low
 Threat of substitute products: Low
 Competitive rivalry within an industry: High
 Performance
 Revenue
 Net Profit Margin (Absolute vs. Relative to S&P 500)
 EPS / EPS Growth (YoY)
ROE (Absolute vs. Relative to S&P 500)
Absolute Basis
Median
20
18
16
14
12
10
8
6
4
2
0
17.8
Current
18.7
16.6 16.5
12.5 13.2
4
4
1
P/Trailing E
P/Forward E
P/B
1
P/S
P/CF
Relative to S&P 500
Median
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Current
1.8
1.6
1.3
1.1
1.1
1.3 1.3
1.2
0.6
P/Trailing E
P/Forward E
P/B
0.7
P/S
P/CF
Correlation to S&P 500
S&P 500
Industrials
Telecommunications
Materials
Healthcare
Utilities
Consumer Discretionary
IT
Energy
Consumer Staples
Financials
Ten year correlations of each sector to the S&P 500 index.
*Thompson Reuters Baseline Data
1
0.98
0.9
0.88
0.87
0.85
0.83
0.79
0.73
0.66
0.42
 Improving conditions in U.S.
 Falling unemployment rate
 GDP growth
 Uncertainty going forward
 Future inflation
 Weakness in Europe
 Slowing China
 Overweight 50 basis points
 Cut 120 basis points from current position
 11.15% (recommended) vs. 10.65% (S&P)
 Improving economic conditions
 In expansionary phase of economic cycle
 Still much uncertainty heading in to the future