“Investors have forsaken old favorites (silver ETFs and energy stocks, for example) and migrated to the unloved (healthcare), ignored (utilities) and boringly stable (consumer staples),” Nicholas Colas, ConvergEx Group chief market strategist, wrote in a report this week. “The same dynamic has been working its way through the options market, repricing risk as market attention shifts.”
“Overall, we see a mixed fundamental picture for the consumer staples area, but think the sector has defensive appeal when compared to other, more economically-sensitive sectors,” added the S&P analysts.
“In the year-ahead for larger consumer staples companies, we expect generally good cash flow, some of which we think will be used to support dividends and stock repurchase activity,” S&P said. “Also, we expect sector companies to bolster earnings and cash flow through cost reduction or restructuring programs, but we anticipate some year-to-year commodity cost pressure.”
Consumer Staples Select Sector SPDR Fund
