The Consumer Staples is back with Costco bursting to a historic high
The market is immersed in plenty of uncertainties after several Fed officers came to the public releasing hawkish remarks with dogged determination to bring down inflation. Yet $Costco (COST.US)$ has astonished groups of investors as it recorded a phenomenal gain on April 7th and skyrocketed to the highest territory in the stock's history.
The $Consumer Staples Select Sector SPDR Fund (XLP.US)$, one of the best candidates to invest in the staples sector, also edged up to a record high in Thursday.
Why do investors favor consumer staples lately?
Consumer staple firms are famous for their ability to withstand economic slowdowns and recessions, meaning that their products like foods and beverages can remain in demand when consumers cut back on expenditures because of worsening financial situation. Thus the Consumer Staples sector is perceived to be non-cyclical and turns out to be investors' favorite when the economy is expected to be suppressed in the future. This is what the global environment looks like currently as some analysts fret about a possible economic recession.
What does JP Morgan's poll say about the Consumer Staples?
From the chart below, we can see investors are optimistic about three investment directions: Tech, Defensive, and Commodity.
For prudent investors seeking constant and steady returns, defensive sectors are without doubt the top priority for them to navigate through economic confusion and turmoil. Besides, market participants are keeping Tech and commodity sectors in check as well, which could be served as fantastic investment opportunities for people who hold a bright outlook moving forward.
Aside from the Consumer Staples sector, Utilities and Health Care, which will be invested through $Utilities Select Sector SPDR Fund (XLU.US)$ and $The Health Care Select Sector SPDR® Fund (XLV.US)$, can also be utilized as potent defensive tools hedged against a gloomy economy. This article listed the Consumer Staples sector solely yet there could be a significant risk may get involved to any investors who want to follow the trend since the sector index has reached a all-time high.
The revenue growth rate will not be deterred
The revenue growth rate is a vital indicator for investors to look at. As is shown in the chart below, the 2022's revenue growth rate of the Consumer Staples sector, which is represented by the red line, stays at a decent level in an uptrend. It indicates that major industry analysts don't think Covid or inflation will dampen expenditures on consumer staples. The 2023's growth rate is also strong without a significant dip.
Conclusion
The Consumer Staples sector is non-cyclical and the revenue growth rate, predicted by industry analysts, remains solid during the next two years without implications from geopolitical issues and inflation. This helps explain why its performance were boosted by investors during the past few weeks.
Disclaimer: Investing involves risk and the potential to lose principal. Past performance does not guarantee future results. This is for information and illustrative purposes only. It should not be relied on as advice or recommendations.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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