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RHS: Consumer Staples Dashboard For February

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This monthly article bid shows a dashboard pinch aggregate manufacture metrics successful user staples. It is besides a reappraisal of assemblage exchange-traded costs ("ETFs") for illustration nan Consumer Staples Select Sector SPDR ETF (XLP) and nan Invesco S&P 500 Equal Weight Consumer Staples ETF (NYSEARCA:RHS), whose holdings are utilized to cipher these metrics.

Shortcut

The adjacent 2 paragraphs successful italic picture nan dashboard methodology. They are basal for caller readers to understand nan metrics. If you are utilized to this bid aliases if you are short of time, you tin skip them and spell to nan charts.

Base Metrics

I cipher nan median worth of 5 basal ratios for each industry: Earnings Yield ("EY"), Sales Yield ("SY"), Free Cash Flow Yield ("FY"), Return connected Equity ("ROE"), Gross Margin ("GM"). The reference beingness includes ample companies successful nan U.S. banal market. The 5 guidelines metrics are calculated connected trailing 12 months. For each of them, higher is better. EY, SY and FY are medians of nan inverse of Price/Earnings, Price/Sales and Price/Free Cash Flow. They are amended for statistical studies than price-to-something ratios, which are unusable aliases non disposable erstwhile nan "something" is adjacent to zero aliases antagonistic (for example, companies pinch antagonistic earnings). I besides look astatine 2 momentum metrics for each group: nan median monthly return (RetM) and nan median yearly return (RetY).

I for illustration medians to averages because a median splits a group successful a bully half and a bad half. A capital-weighted mean is skewed by utmost values and nan largest companies. My metrics are designed for stock-picking alternatively than scale investing.

Value and Quality Scores

I cipher humanities baselines for each metrics. They are noted respectively EYh, SYh, FYh, ROEh, GMh, and they are calculated arsenic nan averages connected a look-back play of 11 years. For example, nan worth of EYh for food in nan array beneath is nan 11-year mean of nan median Earnings Yield in food companies.

The Value Score ("VS") is defined arsenic nan mean quality successful % betwixt nan 3 valuation ratios (EY, SY, FY) and their baselines (EYh, SYh, FYh). The aforesaid way, nan Quality Score ("QS") is nan mean quality betwixt nan 2 value ratios (ROE, GM) and their baselines (ROEh, GMh).

The scores are successful percent points. VS whitethorn beryllium interpreted arsenic nan percent of undervaluation aliases overvaluation comparative to nan baseline (positive is good, antagonistic is bad). This mentation must beryllium taken pinch caution: nan baseline is an arbitrary reference, not a expected adjacent value. The look assumes that nan 3 valuation metrics are of adjacent importance.

Current Data

The adjacent array shows nan metrics and scores arsenic of past week's closing. Columns guidelines for each nan information named and defined above.

VS

QS

EY

SY

FY

ROE

GM

EYh

SYh

FYh

ROEh

GMh

RetM

RetY

Staple/Food Retail

-31.89

-21.95

0.0291

1.8592

0.0116

11.61

19.12

0.0421

1.9105

0.0306

16.63

22.16

-0.60%

0.24%

Food

-24.17

4.45

0.0414

0.5750

0.0121

18.55

29.38

0.0457

0.6664

0.0239

15.39

33.25

-3.12%

3.83%

Beverage

-3.22

-20.61

0.0327

0.2771

0.0167

18.06

44.41

0.0362

0.2678

0.0173

24.17

52.82

0.49%

-0.93%

Household prod.

-8.18

0.72

0.0616

1.1177

0.0051

18.75

37.95

0.0456

0.8816

0.0375

17.26

40.88

-1.18%

-28.88%

Personal care

-39.55

-3.01

0.0258

0.3357

0.0077

17.25

62.32

0.0380

0.4502

0.0198

21.06

55.59

3.76%

-8.59%

Tobacco

30.78

-25.05

0.0721

0.7174

0.0179

18.37

50.75

0.0588

0.4721

0.0152

34.58

52.42

0.01%

1.85%

Value And Quality chart

The adjacent floor plan land nan Value and Quality Scores by manufacture (higher is better).

Value and value successful user staples

Value and value successful user staples (Chart: author; data: Portfolio123)

Evolution Since Last Month

The astir notable changes are an betterment of some scores successful nan baccy industry, and a deterioration successful individual attraction products (for some scores too).

 Portfolio123

Value and value variations (Chart: author; data: Portfolio123)

Momentum

The adjacent floor plan land median returns by subsector.

Momentum successful user staples

Momentum successful user staples (Chart: author; data: Portfolio123)

Interpretation

Tobacco is undervalued by astir 30% comparative to 11-year averages, but a bad value people partially obliterates that. A statement of caution: only 5 baccy companies are successful my reference universe. Therefore, statistic are little reliable than successful different industries. Household products are adjacent to their humanities baseline successful some valuation and quality. Other subsectors person either a bad worth score, aliases a bad value score. The little charismatic ones are individual attraction and staple/food retail.

Fast Facts connected RHS

Invesco S&P 500 Equal Weight Consumer Staples ETF has been search nan S&P 500 Equal Weight Consumer Staples Index since 11/01/2006. It has a full disbursal ratio of 0.40%, which is importantly much costly than nan user staples benchmark XLP (0.10%).

All constituents person nan aforesaid weight aft each rebalancing, but they whitethorn drift pinch value action. The adjacent array lists nan apical 10 holdings, which person an aggregate weight of 32.5%. These are nan stocks pinch nan highest value momentum since nan past rebalancing. Risks related to individual companies are little than successful XLP, wherever nan apical 10 holdings measurement almost 70% of nan fund, and nan apical name, Procter & Gamble Co (PG), represents astir 15% of plus value.

Ticker

Name

Weight%

EPS maturation %TTM

P/E TTM

P/E fwd

Yield%

LW

Lamb Weston Holdings, Inc.

3.67

147.84

30.58

25.27

1.12

COST

Costco Wholesale Corp.

3.28

13.83

38.10

34.92

0.71

MNST

Monster Beverage Corp.

3.26

-20.69

45.94

45.11

EL

The Estee Lauder Companies, Inc.

3.26

-53.40

60.50

49.76

1.06

CHD

Church & Dwight Co., Inc.

3.25

-49.55

49.51

26.95

1.32

CLX

The Clorox Co.

3.22

76.47

43.48

36.29

3.09

MO

Altria Group, Inc.

3.19

139.50

14.86

9.38

7.93

KHC

The Kraft Heinz Co.

3.13

133.86

20.79

14.61

4.02

HSY

The Hershey Co.

3.12

11.93

29.55

25.08

1.76

WMT

Walmart, Inc.

3.12

13.31

44.58

23.74

1.55

RHS is cheaper than XLP regarding nan accustomed valuation ratios, reported successful nan adjacent table.

RHS

XLP

Price / Earnings TTM

23.66

25.32

Price / Book

3.5

5.45

Price / Sales

1.25

1.61

Price / Cash Flow

16.37

19.01

Data: Fidelity.

It has somewhat outperformed XLP since inception. The quality is 81 bps successful annualized return. The maximum drawdown is simply a spot deeper.

Total Return

Annual.Return

Max Drawdown

Sharpe

StdDev

RHS

390.87%

10.27%

-35.93%

0.76

12.98%

XLP

335.71%

9.46%

-32.39%

0.73

12.40%

Data and calculations: Portfolio123.

In summary, RHS is simply a solution for investors seeking vulnerability to user staples and debar attraction successful nan largest companies of nan sector. It is somewhat amended than XLP successful valuation and past performance. However, liquidity makes XLP a amended instrumentality for tactical allocation and trading.

Dashboard List

I usage nan first array to cipher worth and value scores. It whitethorn besides beryllium utilized successful a stock-picking process to cheque really companies guidelines among their peers. For example, nan EY file tells america that a nutrient institution pinch an net output supra 0.0414 (or price/earnings beneath 24.15) is successful nan amended half of nan manufacture regarding this metric. A Dashboard List is sent each period to Quantitative Risk & Value subscribers pinch nan astir profitable companies opinionated successful nan amended half among their peers regarding nan 3 valuation metrics astatine nan aforesaid time. The database beneath was sent to subscribers respective weeks agone based connected information disposable astatine this time.

USNA

USANA Health Sciences, Inc.

CALM

Cal-Maine Foods, Inc.

COKE

Coca-Cola Consolidated, Inc.

It is simply a rotational exemplary showing semipermanent excess return, not nan consequence of an study of each stock.

Quantitative Risk & Value (QRV) features data-driven strategies successful stocks and closed-end costs outperforming their benchmarks since inception. Get started pinch a two-week free proceedings now. 

Editor: Naga



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