In a note released Tuesday, UBS analyst Stephen Powers compared pre-recession performance in the Home & Personal Care and Beverages sectors to current challenges facing these companies.
Before the 2008 recession, companies in the HPC and beverage groups were, “simple, profitable, and highly cash-generative businesses,” as well as optimistic about “ever-rising consumption” from emerging markets, according to Powers.
Moving to present day, Powers sees the following challenges:
- “Developed market growth is likely to remain slow and price-competitive,
- Emerging market growth is also likely to face structural challenges, and
- External forces (e.g., regulation, taxation, commodity/FX volatility, new technologies, channels shifts, etc.) are going to make the operating environment consistently more complicated.”
Powers is a buyer of Estee Lauder (NYSE: EL
), Monster Beverages
), Church & Dwight (NYSE: CHD
), and Colgate-Palmolive (NYSE: CL
). Powers is staying on the sidelines on Proctor & Gamble
), Coca-Cola Enterprises (NYSE: CCE
), and Dr Pepper Snapple (NYSE: DPS
). He is recommending investors sell shares of Energizer (NYSE: ENR
), Avon Products (NYSE: AVP
), and Clorox (NYSE: CLX
Latest Ratings for EL
|Mar 2015||Piper Jaffray||Upgrades||Neutral||Overweight |
|Mar 2015||Wells Fargo||Upgrades||Market Perform||Outperform |
|Mar 2015||Citigroup||Maintains||Neutral |
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