Consumer Staples breakout has staying power

By Yaser Anwar, CSC of Equity Investment Ideas

# It was highlighted that the growth in shipments of consumer staples goods were likely to outperform overall manufacturing shipments.

# Such a development would provide the earnings catalyst that has been lacking during each of the failed breakout attempts in consumer staples stocks over the past several years.

# The boom in global economic growth caused consumer staples shipments to underperform, leading to a sharp drop in relative earnings growth estimates for the sector.

# As a result, rally attempts never garnered broad-based investor support. Now, with the Fed moving into overshoot territory, the ingredients for a marked slowdown in U.S. output growth exist, which means that at least a partial reversal of the profit conditions of the past few years should develop.

# Thus, in relative terms, analyst earnings estimates are poised for a sharp re-rating which should attract sustained buying interest.

# Even the pricey consumer staples subcomponents are on track to outperform.

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