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Consumer Staples Stocks: The Stragglers of H1 2018

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What’s behind the underperformance?

The Consumer Staples Select Sector SPDR ETF (XLP) underperformed the broader markets in the first six months of 2018 as a steep decline in the stock prices of tobacco, packaged foods, and household and personal care product manufacturers took a toll on it.

Comparatively, the Technology Select Sector SPDR ETF (XLK), the Consumer Discretionary Select Sector SPDR ETF (XLY), and the SPDR S&P Retail ETF (XRT) increased 8.6%, 10.8%, and 7.5%, respectively.

The above graph shows that the stock prices for tobacco and most packaged foods and consumer product makers have declined in the double digits in the first half of 2018. Lower shipment volumes and a decline in the worldwide smoking rate is affecting the stock prices of tobacco companies.

Soft organic sales, a consumer shift toward healthy foods, a tough retail environment, and higher costs continue to hurt the financials of packaged food manufacturers.

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The stocks of household and personal care product manufacturers such as Procter & Gamble (PG) and Colgate-Palmolive (CL) have also declined in the double digits in the first half of 2018. That reflects increased competition, lower net price realizations, and higher manufacturing and logistics costs.

Series overview

In this series, we’ll focus on the key challenges that are hurting the stocks of consumer staples companies. We’ll also look at their near-term outlooks and the latest analyst recommendations.

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