Consumer staple stocks were in favor with many investors during the depths of the recession. The prospect of reliable revenue from big brands, a decent dividend yield and the stability of a blue chip stock like Procter & Gamble (NYSE: PG) or Unilever (NYSE: UL) was hard to pass up. After all, consumers will cut back on just about everything before they stop buying Crest toothpaste and Hellman’s mayonnaise.
But now that consumer spending has improved, it may be time for investors to reconsider the staples stocks in their portfolio. Not only are there other opportunities out there as the stock market improves, but some of these consumer stocks are dead in the water and look like they may lag the market in the future.
Here are 5 consumer stocks to sell now:
Sysco Corp. (SYY)
Leading off the list of consumer blue-chip stocks to sell in Sysco Corp. (NYSE: SYY). Sysco is known as a food distributor for the foodservice or food-away-from-home industries — serving dorms and cafeterias, among other dining venues. In the last six months, SYY is down -9%, while the broader markets have been posting impressive gains of over 17%. More importantly, in its last income statement, SYY posted a quarterly earnings growth of -8%, year-over-year.
Unilever PLC (UL)
Supplier of consumer goods Unilever PLC (NYSE: UL) across nutrition, hygiene and personal care product lines that include Bertoli pasta, Dove soap, Vaseline lotions and Slim-Fast weight loss products. The last few months have been dismal for UL shareholders who have watched the stock drop -4% in the last 90 days while the broader market is up almost double digits. It should also be noted that Unilever has missed earnings estimates for three consecutive quarters. This $85 billion market cap blue chip may be trading near the top end of its 52-week range, but it has shown no promising signs that it is ready for a move higher.
Procter & Gamble Co. (PG)
Proctor & Gamble (NYSE: PG) provides packaged consumer goods to its customers in over 180 countries. The company is broken into three business segments: Beauty and Grooming that includes Gillette razors and Pantene shampoo, Health and Well-Being items including Pepto Bismol and Scope mouthwash,m and Household Care including Downy and Mr. Clean brands. While Proctor & Gamble may be a household name, not every household should hold its stock. PG looked to be gaining nicely at the end of 2010, but that trend stopped nearly three weeks ago. Since then PG has sold off sharply, though it has rebounded a bit over the last few days. PG’s last income statement was its quarterly earnings growth which was -28%, year-over-year so more drops could be in the works.
Colgate-Palmolive Co. (CL)
Selling its products in over 200 countries Colgate-Palmolive Co. (NYSE: CL) is known for its lines of toothpaste, toothbrushes, mouth washes, soft soaps, bar soaps and deodorants, among others. Despite the wide client base, CL stock has been anemic of late. In the last 12 months, CL posted a loss of -1%, compared to gains of +25% and +24% for the S&P 500 and Dow Jones, respectively. CL is having a hard time on the earnings front as analysts are projecting EPS of just $1.17 this quarter after the company posted EPS of $1.21 this quarter last year.
Avon Products Inc. (AVP)
Global manufacturer of beauty products Avon Products Inc. (NYSE: AVP) has had the worst run of any stock on this list. Since reaching a 52-week high in October, AVP has swooned -18%. Looking back on the last year, the stock lost -3%, compared to much larger gains by the broader markets. Even more distressing is that fact that AVP has remained stagnant since its October drop, not regaining any of its losses. In fact, the stock is down -4% in the last month. Earnings wise, AVP is projected to post an EPS one cent lower than this quarter last year. Finally, despite a decent run over the last few days, AVP is trading just above its 52-week low of $25.
As of this writing, Louis Navellier did not own a position in any of the stocks named here.
