“Clinton is anti-sugar and anti-tobacco. This is potentially bad news for companies like The Coca-Cola Company (KO), Pepsico, Inc. (PEP), Altria Group, Inc. (MO), Reynolds American Inc. (RAI), and Philip Morris International, Inc. (PM). That said, these are all well-capitalized companies that are diversified and potential of inorganic growth, which can then allow them to find new revenue streams that aren’t impacted by new government policies,” according to Investopedia.
Amid fears of rising interest rates and concerns that the sector is overvalued even relative to its lofty historical norms, the consumer staples group has recently encountered some headwinds.
Defensive sectors often trade at premium valuations relative to the broader market and that is certainly the case at the moment with the consumer staples and utilities groups.
“If you want to keep the Clinton trade as simple as possible, then consider doing further research on long clean energy, short biotech, and steering clear of soda and tobacco. You generally don’t want to short sugar and tobacco,” notes Investopedia.
For more information on the consumer staples sector, visit our consumer staples category.