Consumer Staples Stock Recommendations and Economic Insights
Explore recommendations from experts Rocco Duco, Ben Dushnitzky, Vince Fermann, and Rohan Gaglani regarding consumer staples stocks, along with insights on economic factors impacting the market. Discover current portfolio characteristics, sector performance, and key questions for navigating the market trends.
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Consumer Staples Stock Recommendations Rocco Duco, Ben Dushnitzky, Vince Fermann, and Rohan Gaglani
Sim Portfolio Portfolio Characteristics No single position can be above 5% of portfolio Sectors must be within 300 bps of S&P 500 weight Consumer Staples is currently overweight relative to S&P 500 by 216bps 2
Current Consumer Staples Positions Total Sector has an unrealized gain of $10,451 Driven primarily by Walmart which has been a growth engine within sector Kroger underperforming due to potential merger with Albertson s Low beta allows for relief when markets move downward 3
Walmart (WMT) Performance 5-year performance compared to S&P 500 and an ETF Tracking Consumer Staples
Key Questions for Sector Where are we within Economic Cycle? Where is the value within this sector? How do you ensure you don t miss out if markets rise higher? 5
Economic Factors Consensus is that earnings pressure is coming as rate hikes take effect S&P 500 2019 2020 2021 2022 2023 2024 2025 Total Revenues, 1 Year Growth Net Income Margin Diluted EPS Before Extra, 1 Year Growth 4.5% 10.3% -4.3% 7.4% 16.8% 13.2% 12.3% 10.2% 12.2% 12.8% 2.0% 4.7% 5.1% 13.3% 4.5% -32.3% 110.3% -12.6% 0.1% 11.7% 11.3% Consumer Staples 2019 2020 2021 2022 2023 2024 2025 Total Revenues, 1 Year Growth Net Income Margin Diluted EPS Before Extra, 1 Year Growth 4.2% 5.5% 2.6% 6.3% 10.4% 6.6% 8.4% 5.7% 12.3% 6.6% 3.5% 7.0% 3.9% 7.2% -14.6% 18.1% 15.2% -5.2% 4.2% 9.4% 9.0% 6
Economic Factors 10-2 Treasury Yield inversion leading indicator of recession 7
Economic Factors Fed hiking cycles usually end in recessions 8
Recommendation 1. Add to current portfolio to maximum allowable position in sector- overweight 2.96% 2. Add Kraft Heinz Corp to portfolio 90 bps 3. Maintain current holdings of Walmart, Kroger, and Tyson Walmart allows for upside in sector Kroger merger should allow for significant growth opportunities 10
Kraft Heinz Corp Analysis The Kraft Heinz Company NASDAQ: KHC Stock Price as of July 7, 2023: $35.46 Target Price: $45.42 Upside/Downside Recommendation: 28.1% BUY 52 Week Range: $32.73-42.80 Market Data The Kraft Heinz Company KHC Consumer Staples Packaged Foods 43.8B 1.23B 7.148M 0.66 Company Ticker Sector Industry Market Cap Shares Outstanding Average Volume Beta (5Y) $44 35.46 38.08 Financial Data 26,485M 1.70% 2,363M 1.91 4.49% Revenue (2022) Revenue Growth (YoY) Earnings (2022) EPS Dividend Yield $30 July 7, 2022 July 7, 2023 11
Kraft Heinz Corp Analysis KHC is currently undervalued within the market due to issues with company merger and poor prior leadership Relative to Consumer Staples 0.55 0.13 1.13 Valuation Metric3 Consumer Staples Relative to S&P S&P KHC P/E P/B P/S 20.69 3.87 2.51 22.07 6.82 1.42 12.22 0.89 1.61 0.59 0.23 0.64 12
Kraft Heinz Corp Analysis Modeled vs. Consensus EPS FY 2024F 2023F 3.04 2.90 3.01 2.90 FY FY FY FY FY 2022 1.91 FY 2021 0.82 FY 2020 0.29 FY 2019 1.58 FY 2018 (8.36) FY 2017 8.91 $EPS 2027F 3.41 3.77 2026F 3.30 3.53 2025F 3.19 3.21 Modeled Consensus3 13
