Deep Dive: Tech stocks have a surprising new rival

Deep Dive: Tech stocks have a surprising new rival

Tech stocks have a surprising new rival

We pointed out in April that the consumer staples sector was the worst performer among the 11 S&P 500 sectors in 2018.

That is still the case. However, the sector, which some investors view as a defensive play, is up 3.5% in the past month, in line with the technology sector. Several consumer staples companies have posted double-digit gains during the period.

Here’s a summary of how the 11 S&P 500 SPX, -0.53% sectors have performed over the past month, along with longer total returns:

Total returns
S&P 500 sector May 14 through June 14 2018 through June 14 2017 3 years 5 years 10 years
Consumer Discretionary 6.8% 14.2% 23% 54% 116% 320%
Information Technology 3.6% 15.3% 39% 86% 174% 279%
Consumer Staples 3.5% -9.7% 13% 16% 44% 141%
Health Care 2.4% 4.1% 22% 21% 92% 233%
Materials 2.2% 0.3% 24% 28% 67% 70%
Real Estate 1.6% -2.8% 11% 21% 46% 88%
Industrials 1.3% 0.2% 21% 41% 89% 145%
Telecommunications -0.3% -10.0% 0% 10% 16% 69%
Utilities -1.2% -5.0% 12% 30% 57% 78%
Energy -1.3% 6.4% -1% 9% 10% 12%
Financials -2.3% -0.8% 22% 44% 91% 78%
S&P 500 Index 2.1% 5.0% 22% 41% 90% 154%
Source: FactSet

The consumer discretionary sector has performed the best, driven by a strong showing by its five largest companies according to market cap:

  • Amazon.com AMZN, -0.36% — Up 8% from May 14 through June 14; up 45% so far in 2018.
  • Home Depot HD, +0.28% — Up 5% in one month; up 7% in 2018.
  • Netflix NFLX, +0.77% — Up 20% in only one month; up 105% in 2018.
  • Walt Disney DIS, +0.02% — Up 6% in one month; up 1% in 2018.
  • Comcast CMCSA, -0.18% — Up 5% in one month; down 15% in 2018.

Getting back to the consumer staples sector, here are its 10 best performers over the past month, along with longer-term returns and changes in sales per share:

Company Ticker Total return – May 14 through June 14 Total return – 2018 through June 14 Total return – 2017 Total return – 3 years Total return – 5 years Change in quarterly sales per share from year earlier
Monster Beverage Corp. MNST, -0.01% 15% -11% 43% 31% 184% 16%
Estée Lauder Cos. Class A EL, +1.04% 11% 24% 69% 87% 143% 17%
Molson Coors Brewing Co. Class B TAP, +0.73% 11% -18% -14% -3% 49% -5%
PepsiCo Inc. PEP, +1.07% 9% -11% 18% 22% 48% 5%
Kellogg Co. K, -0.26% 9% 0% -5% 17% 20% 6%
Clorox Co. CLX, +0.72% 7% -13% 27% 32% 72% 2%
Church & Dwight Co. CHD, +0.78% 6% 0% 15% 25% 76% 19%
Kroger Co. KR, -0.99% 6% -4% -19% -23% 62% 20%
Sysco Corp. SYY, -0.34% 6% 11% 12% 95% 123% 9%
Tyson Foods Inc. Class A TSN, +0.32% 5% -12% 33% 77% 194% 8%
Source: FactSet

We looked at sales per share rather than raw revenue, because the per-share numbers incorporate any dilution from the issuance of additional shares, which is particularly important if a company’s sales are lifted by a major acquisition. The per-share numbers are also lifted if a company’s share count is reduced because of stock repurchases.

Molson Coors TAP, +0.73% reported uninspiring first-quarter results, with a seasonal decline in sales, but the shares rebounded when the company expressed confidence in its full-year targets for 2018.

Stephen Lee of Logan Capital made a case for Estée Lauder in April, citing the company’s strong brands and ability to maintain pricing power while expanding online sales as long-term positives. Estée Lauder and Monster Beverage were both held by the Logan Capital Large-Cap Growth Fund LGNGX, +0.53% as of March 31, according to Morningstar.

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Philip van Doorn

Philip van Doorn covers various investment and industry topics. He has previously worked as a senior analyst at TheStreet.com. He also has experience in community banking and as a credit analyst at the Federal Home Loan Bank of New York.

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