fotofrog/E+ via Getty Images
The consumer staples sector's fall marks a sharp contrast to the 25.08% gain of S&P 500. The sector has had a mixed year, with a slight rise in since March, dipping again in May, and rising once more in June, but finally faced significant lows from September till the year end.
Industries 2023 Performance
Distribution & Retail rose 13.62%, while Food, Beverage & Tobacco down 6.87% in 2023.
U.S. stock fund flows into and out of the consumer staples sector have swung from week to week. The consumer staples-focused ETF had a net outflow of $1.41B.
What Top 5 movers in 2023
Gainers
Costco Wholesale (COST) +47.9%.
Lamb Weston (LW) +21%.
Molson Coors Beverage (TAP) +18.8%.
Church & Dwight Co.(CHD) +17.3%.
Monster Beverage(MNST) +13.5%.
Losers
Dollar General (DG) -44.8%.
The Estée Lauder (EL) -41.1%.
Hormel Foods(HRL) -29.5%.
Conagra Brands(CAG) -25.9%.
Campbell Soup(CPB) -23.8%.
What Analysts Expect
Out of the three SA Analysts surveyed by Seeking Alpha in the past 90 days, one of them have a Strong Buy rating, one have a hold rating, and one has Sell.
SA contributor Mike Zaccardi asserted that XLP is undervalued compared to its 10-year average, but price action needs to improve for a buy rating to be issued.
UBS, however, said it expects that consumer staples, among info tech and energy would be the most preferred sectors for 2024, noting that cooling inflation data and labor market conditions have been some of the driving catalysts.
HSBC said it expected 2024 to be a more normal year for the consumer staples sector after coming through the long disruption around the pandemic and spike of heavy inflation.
"The fundamentally stable nature of consumer staples as an industry means that overall demand should continue to be robust, although we still see a rather slow 2024 as pricing comes off and economic growth remains anemic in a number of key markets," said HSBC analysts Jeremy Fialko, Carlos Laboy and Sameer Lam.
Barclays also predicts the sector to deliver solid earnings growth in 2024.
What Quantitative Measures Say
XLP receives a Sell rating from SA quant system with 1.98 score. This comes in large part due to an D grade in the category of risk. The stock also receives a D for momentum. Countering this are high grades in other areas. XLP receives an A+ for dividends and liquidity and A for Expenses.