For Immediate Release
Chicago, IL – September 29, 2016 – Today, Zacks Equity Research discusses the Consumer Staples, part 2, including Wal-Mart Stores, Inc. (NYSE: (WMT - Free Report) -Free Report ) , McDonald's Corp. (NYSE: (MCD - Free Report) -Free Report), Target Corp. (NYSE: (TGT - Free Report) -Free Report ), TJX Companies, Inc. (NYSE: (TJX - Free Report) -Free Report ) and Molson Coors Brewing Co. (NYSE: (TAP - Free Report) -Free Report )
Industry: Consumer Staples, part 2
Backed by an improving economy, the consumer staples sector has been performing really well among most product categories over the past few months. Lower gas prices and increasing consumer confidence are doing the trick for a number of operators in this space. Importantly, consumer staples are benefiting from their perceived stability and defensive attributes in the current uncertain global backdrop.
Consumer confidence is now at its highest level since the recession. Consumer confidence index surged for the second consecutive month in September, signaling that the economy is improving. Stepped-up economic activities, improving business conditions, housing market recovery, a buildup in inventories and improving labor market are some favorable economic indicators that play a key role in raising buyers’ confidence.
Though the decline in oil prices caused worries related to global deflation and an economic slowdown, it eased consumer spending power. Notably, consumer spending accounts for more than two-thirds of U.S. economic growth.
A rise in wages has also increased household wealth and eventually boosted consumer spending. A number of retailers and fast food chains, including Wal-Mart Stores, Inc. (NYSE: (WMT - Free Report) -Free Report ) , McDonald's Corp. (NYSE: (MCD - Free Report) -Free Report), Target Corp. (NYSE: (TGT - Free Report) -Free Report ) and The TJX Companies, Inc. (NYSE: (TJX - Free Report) -Free Report ) have hiked wages.
Performance of Consumer Staples Sector
With respect to the broader economy, GDP growth was fairly weak in the first two quarters of the year, but is expected to come back in a meaningful way in the current period. While areas like manufacturing, exports and capital investments are suffering, many other aspects of the economic picture are showing a lot more strength.
Households are benefiting from steady labor market gains, with even wages starting to show momentum lately. The housing industry is another bright spot, promising steady momentum going forward. Many analysts see the U.S. economic outlook as stable and improving; better than most other parts of the world.
Market experts believe that consumer staples stocks have the potential to counter macro headwinds like the Brexit aftershocks, the Federal Reserve’s possible rate hike in December, impact of currency fluctuations and other global growth issues.
Companies in this space typically have tight margins, and a reduction in energy prices over the last two years is helping them to reduce costs. Going forward, consumer staples companies will continue to benefit from decreasing commodity and lower energy costs, which will aid profit margins.
Apart from this, let’s discuss some of the key factors that have been driving consumer staples stocks in the past few quarters, despite global worries, and also have the potential to boost earnings in the near term.
In a crowded and competitive space, consumer product companies need to regularly innovate and upgrade their brands to create differentiated value propositions and to remain successful. In fact, companies with innovative products in their pipeline will be in a position to benefit.
Global brewer Molson Coors Brewing Co. (NYSE: (TAP - Free Report) -Free Report ) has also been launching new products to boost revenues and market share, which help it to offset the impact of declining volumes. Molson Coors also invests in marketing and advertising to create brand awareness.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
Get the full Report on WMT - FREE
Get the full Report on MCD - FREE
Get the full Report on TGT - FREE
Get the full Report on TJX - FREE
Get the full Report on TAP - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »