• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Consumer Staples

Checked the 52-Week Low List Lately? It's a Graveyard of Well-Known Stocks

What's really surprising is the emergence of so many household names on the list.
By JIM COLLINS
May 07, 2018 | 09:00 AM EDT
Stocks quotes in this article: JNJ, TAP, CL, KO, KHC, AMZN, WMT

On a day like Friday when most stocks were in the green it is important to go back and see what's not working, in case there are a few tasty bargains to be picked up. I like to scour the 52-week lows for potential turnaround plays, and as the editor of the newsletter Microcap Guru, I am used to seeing some familiar, albeit non-household, names on the list of new lows. The little guys make it interesting, but what has really surprised me of late is the emergence of so many household names on the list of 52-week lows.

Are you familiar with any of these companies? Johnson & Johnson (JNJ) , Molson Coors (TAP) , Colgate-Palmolive (CL) , Coca-Cola (KO) , Kraft Heinz (KHC) ? Unless you live completely off the grid you will be familiar with the names, and the market has been heaping scorn -- and selling -- consumer product and food and beverage stocks for most of 2018. These so-called "defensives" have been anything but defensive the year, and if they form part of the "buy and hold forever" section of your portfolio, you are likely lagging the averages.

Why? Well, part of the appeal of consumer stocks has always been dividend growth, and as we enter a period of higher short-term interest rates -- three-month LIBOR is at 2.36% as of this writing -- the yields on those stocks become relatively less attractive. So, that makes sense.

The other part of the historical appeal of consumer names is steady revenue growth versus sectors such as autos, steel, energy, etc. that exhibit cyclicality. But it is on the revenue line where these companies have been falling short.

As an example, Molson Coors shares were eviscerated Wednesday after reporting a shocking 7.2% year-over-year decline in revenues for its first quarter. It's hard to consider TAP a growth company when sales are actually shrinking, and long-term TAP investors must have felt Wednesday like I did the day after I first tried the company's Molson Canadian beer decades ago. Molson's core EBITDA fell even more than revenues, dropping 19.7% in the quarter, and that is what investors really fear when they see a soft top line.

Going to more salubrious subsegment, Colgate-Palmolive saw the same pressures. Reported sales growth of 6.5% was fine, but stripping out the currency benefits and newly acquired business, CL's organic sales growth was only 1.5% for the quarter. Again, that's just not enough to keep long-term investors interested in the story.

So, now that first-quarter earnings season is virtually over -- and Elon Musk is surely glad about that -- it behooves investors in consumer sectors to refocus on companies that can actually deliver top-line growth. The market is certainly not expecting long-term yields to decline, so any sort of dividend tailwinds for these old-fashioned growth stocks are dissipating. It's all about the revenues now.

If the U.S. consumer is not spending as much on toiletries, packaged foods -- Kraft Heinz has been a total disaster, although you wouldn't know that from the love-in that was Warren Buffett's appearance on CNBC Friday morning -- and fermented beverages, these companies need to find growth overseas and stop fixating on the level of the dollar. Unit volume growth leads to profit growth, and Amazon (AMZN) certainly doesn't seem to have a problem generating incremental volume.

And that's really the bottom line here. Methods of distribution are changing, and combinations like the proposed merger of Sainsbury's and Walmart's (WMT) Asda in the U.K. are going to keep occurring around the globe, I believe. So, companies that sell through those channels better figure out ways to get consumers more interested in their products, or the 52-week low list will continue to be a consumer products stock graveyard.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Collins had no position sin any Securities mentioned.

TAGS: Investing | U.S. Equity | Consumer Staples | Earnings | Consumer | Dividends | How-to | Stocks

More from Consumer Staples

Jim Cramer: How Will Stocks That Thrived Amid Covid Do Post-Pandemic? Who Knows

Jim Cramer
Feb 5, 2021 6:54 AM EST

The forces that benefited shares of companies such as Peloton Interactive and Clorox may not sustain them once the impact of the virus subsides.

Altria Stock Is Ready to Light Up

Bruce Kamich
Jan 27, 2021 9:31 AM EST

Earnings for the tobacco company are set for Thursday.

My Top Stock Pick for 2021

Ed Ponsi
Dec 31, 2020 8:30 AM EST

Even after a solid 2020, this company has laid the groundwork for a successful 2021.

With Dividend Investing En Vogue, Here Are 4 More Stocks to Consider

Chris Versace
Dec 22, 2020 10:00 AM EST

The consistent annual dividend increases by this quartet even during bad times make them good income-investing bets going forward.

2 Food Stocks Worth Digging Into for Dividend-Hungry Investors

Chris Versace
Dec 3, 2020 11:00 AM EST

Long histories of annual dividend increases make Hormel Foods and McCormick & Co. attractive income plays.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 10:53 AM EST GARY BERMAN

    Nasdaq Composite: Some Backing and Filling Is Here

    As today is the 4th day of the month, it seems lik...
  • 07:59 AM EST PAUL PRICE

    Fabulous News on United Natural Foods (UNFI)

    The major potential risk factor for , its contrac...
  • 08:50 AM EST PAUL PRICE

    Michaels: Close to a Deal?

    It appears that a deal could be announced soon. ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login