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
0
