The stock market started the year by falling. Although there has been some recovery the long bull market is getting old and frail. We are wondering about what stocks to own as the market falls. As it turns out so is CNBC as they write about consumer staples stocks.
Amid the global market turmoil this year, at least one group of stocks has become a big benefactor – consumer staples.
The traditionally defensive sector hit an all-time high on Wednesday and has been one of the year’s best performing sectors in the S&P 500.
nvestors tend to flock to consumer staples stocks in times of trouble because of consistent demand and dependable dividend yields.
As traders and investors buy consumer staples stocks they are driving up prices, and P/E ratios in this sector. So long as the rest of the market tends to fall money will stay in these stocks but when the market corrects and then recovers its momentum many will pull their money out and look for higher yields. Stocks to own as the market falls are not necessarily stocks to own when the market is on the rise.
Specific Subsectors to Own as the Market Falls
Bloomberg Business provides a listing of industries in the consumer staples group and stock sector performance of sub groups.
Industry |
1 Mo |
3 Mo |
YTD |
PPE |
Price to sales |
Dividend Yield |
Tobacco 8 Companies |
0.00% |
0.00% |
— |
16.6x |
4.1x |
4.07% |
Personal Products 17 Companies |
0.00% |
0.00% |
— |
22.1x |
1.6x |
1.45% |
Household Products 11 Companies |
0.00% |
0.00% |
— |
20.0x |
2.0x |
2.36% |
Household & Personal Products 27 Companies |
+1.34% |
+5.62% |
+3.60% |
16.3x |
1.9x |
2.97% |
Food Products 43 Companies |
0.00% |
0.00% |
— |
18.2x |
0.9x |
2.46% |
Food Beverage & Tobacco 65 Companies |
+5.52% |
+4.38% |
+3.50% |
14.9x |
1.5x |
3.11% |
Food & Staples Retailing 26 Companies |
0.00% |
0.00% |
— |
19.2x |
0.5x |
1.42% |
Food & Staples Retailing 23 Companies |
+6.63% |
+3.17% |
+0.87% |
14.3x |
0.4x |
2.05% |
Beverages 18 Companies |
0.00% |
0.00% |
— |
24.9x |
2.6x |
2.51% |
With stocks to own as the market falls in mind, years ago our sister site, www.ProfitableInvestingTips.com wrote about investing in beer.
In looking at the different types of stock that do well during recessions and profit during recoveries large brewers typically are on the list. Whether your beer of choice is made by Anheuser-Busch or Inbev, Molson Coors or Carlsberg these companies have the capacity to make money year in and year out. There also have been a series of mergers and acquisitions in the brewing business over the years making for some interesting investments.
Beer stocks are good stocks to own as the market falls but, like the rest of the consumer staples stocks traders will want to accurately predict when the market will turn using fundamental and technical analysis and get out before the rest of the market does.
An example of technical analysis is when the market is very bullish on a stock. That typically means that those with money and interest have bought the stock already. With fewer buyers left over the odds begin to favor a downward movement of the stock with any flicker in the stock price as those who have gains will often take profits. The profit taking causes more profit taking and a substantial correction sets in caused by herd mentality. The day trader steeped in technical analysis can short the stock and ride this correction down to a support zone, making profits along the way.
Stocks to Own as the Market Falls PPT
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