Chief Investment Strategist
Summary: In today's equity update we take a look at some of the consumer goods companies that are exposed to the bonanza that is taking place in consumer goods spending as consumers are diverting their spending from travel, leisure activities and gasoline towards consumer goods in general excluding cars. As a result some consumer goods companies are experiencing high growth and we present lists of consumer goods companies to consider.
August retail sales in both the US and Europe were strong hitting record levels. Part of it is a naturally bounce back from depressed levels during the early lockdowns due to Covid-19. As time has progressed our health care sector has become better at treating Covid-19 patients causing the second waves of Covid-19 in the US and Europe to have smaller impact on the health care sector. Only restrictions are enforced and thus retail sales activity can function normally again. On top of that many households are spending much less on travelling and leisure activities than before. Even gasoline consumption is still much lower due to work-from-home increasing disposable income for households. Our theory is that households are reallocating their spending towards consumer goods and delivery services of food and e-commerce packages, and not so much the big-ticket items such as cars.
Go for high quality and brand companies
Zalando’s Q3 numbers yesterday and raised FY20 outlook confirms that consumer goods are doing well, but also Tesco in the UK showed good results the other day. Consumer goods companies such as Nike has also been showing impressive levels of growth since the bottom in March. As a travel and leisure activities remain significantly below normal levels the bonanza in consumer goods will continue. The table below shows high quality consumer goods names (highest return on invested capital) and fastest growing consumer goods companies. Our assumption is that companies with high quality will be better to navigate the uncertain times and companies with a strong brand will be able to lift sales better online, so we recommend investors to incorporate those factors when getting exposure to consumer goods companies.
High quality consumer goods companies (ranked on ROIC)
| Name | Mkt. Cap. USD mn. | Return 5Y | ROIC | P/E |
| Kimberly-Clark Corp | 51,263 | 54.56 | 33.35 | 19.96 |
| Colgate-Palmolive Co | 67,512 | 34.38 | 32.79 | 26.13 |
| NVR Inc | 16,099 | 177.12 | 31.38 | 20.91 |
| Reynolds Consumer Products Inc | 6,494 | 30.50 | ||
| Lululemon Athletica Inc | 44,038 | 523.39 | 30.23 | 80.60 |
| Monster Beverage Corp | 41,754 | 74.43 | 28.00 | 37.08 |
| Clorox Co/The | 26,828 | 101.16 | 27.83 | 28.91 |
| Booking Holdings Inc | 73,249 | 37.15 | 26.04 | 30.97 |
| Persimmon PLC | 10,821 | 80.89 | 25.44 | 12.36 |
| Herbalife Nutrition Ltd | 7,506 | 82.82 | 23.33 | 16.76 |
| Hermes International | 93,936 | 134.36 | 22.90 | 71.06 |
| boohoo Group PLC | 5,487 | 928.09 | 22.26 | 47.98 |
| Moncler SpA | 10,956 | 132.33 | 21.97 | 35.51 |
| Deckers Outdoor Corp | 6,873 | 294.56 | 21.71 | 23.89 |
| Hershey Co/The | 29,853 | 66.97 | 21.42 | 24.51 |
| Taylor Wimpey PLC | 5,720 | -14.80 | 20.80 | 9.93 |
| Levi Strauss & Co | 6,180 | 20.65 | 34.59 | |
| Pandora A/S | 7,707 | -25.71 | 20.63 | 33.46 |
| Garmin Ltd | 18,766 | 216.71 | 20.49 | 22.82 |
| adidas AG | 65,358 | 285.76 | 20.00 | 96.78 |
| Brown-Forman Corp | 35,992 | 100.45 | 19.86 | 43.31 |
| eBay Inc | 36,450 | 121.34 | 18.39 | 18.28 |
| Royal Unibrew A/S | 5,062 | 194.18 | 18.26 | 28.90 |
| Boston Beer Co Inc/The | 11,233 | 307.64 | 17.57 | 80.90 |
Source: Bloomberg and Saxo Group
High growth consumer goods companies (ranked on 1-year revenue growth)
| Name | Mkt. Cap. USD mn. | Return 5Y | Rev. growth 1Y | P/E |
| Etsy Inc | 16,651 | 928.30 | 136.75 | 113.83 |
| HelloFresh SE | 9,326 | 122.65 | 38.20 | |
| Delivery Hero SE | 22,546 | 94.53 | ||
| Wayfair Inc | 29,006 | 670.77 | 83.71 | |
| Fiverr International Ltd | 5,452 | 81.88 | ||
| Farfetch Ltd | 9,075 | 74.27 | ||
| Beyond Meat Inc | 12,076 | 68.53 | 6738.21 | |
| MercadoLibre Inc | 57,682 | 1138.95 | 61.10 | |
| Chewy Inc | 24,197 | 47.36 | ||
| boohoo Group PLC | 5,487 | 928.09 | 44.51 | 47.98 |
| Boston Beer Co Inc/The | 11,233 | 307.64 | 42.00 | 80.90 |
| Grubhub Inc | 6,817 | 146.60 | 41.29 | |
| Amazon.com Inc | 1,598,113 | 498.42 | 40.23 | 122.67 |
| Ocado Group PLC | 23,486 | 596.49 | 34.98 | |
| Zalando SE | 26,790 | 188.38 | 27.38 | 189.13 |
| Clorox Co/The | 26,828 | 101.16 | 21.88 | 28.91 |
| Prosus NV | 148,708 | 18.97 | 38.78 | |
| Campbell Soup Co | 14,636 | 9.84 | 18.43 | 16.30 |
| eBay Inc | 36,450 | 121.34 | 18.24 | 18.28 |
| Conagra Brands Inc | 18,197 | 29.81 | 12.06 | 14.69 |
| Nomad Foods Ltd | 5,019 | 50.06 | 11.38 | 22.14 |
| J M Smucker Co/The | 13,361 | 14.65 | 10.84 | 14.73 |
| Church & Dwight Co Inc | 22,540 | 125.30 | 10.64 | 32.09 |
| ASOS PLC | 6,827 | 83.22 | 10.26 | 98.92 |
| DR Horton Inc | 28,263 | 169.55 | 9.86 | 14.47 |
Source: Bloomberg and Saxo Group
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Head of Fixed Income Strategy
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Head of Commodity Strategy
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Head of Fixed Income Strategy
Quarterly Outlook
Head of Commodity Strategy
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)