On top of that, valuation for staples, a sector that as a result of its defensive posture typically trades at a premium to broader indexes, is looking stretched. By AltaVista’s estimates, XLP’s 2015 P/E ratio is expected to be 19.3, trailing only the Energy Select Sector SPDR (NYSEArca: XLE) among the nine SPDRs. XLP’s estimated price/book value ratio of four is the highest among the sector SPDR ETFs, according to AltaVista data. [Listening to Staples ETFs]
“Profit forecasts have been trending downward in recent months even as sales growth is forecast to accelerate this year — probably due to increasing food price inflation. In any case, like some other defensive sectors Consumer Staples stocks have seen their P/E multiples continue to expand, and are now near their highest level in at least the last five years. As a result these stocks appear rather expensive, and Staples is the only sector with an UNDERWEIGHT recommendation,” said the research firm.
Consumer Staples Select Sector SPDR
