Consumer Sector: Valuations Of Prospective Companies For Your Next Profitable Investments

| About: Ford Motor (F)

This article focuses on the consumer sector of the stock market. (Please see the table of sectors below). It is my intent to write an article on at least one sector per week. I hope to share a mini-perspective on how I go about identifying future profitable investments by using these sectors. Profiting consistently in the stock market is a common goal for all investors. My work is an analytic process that has been successful for both my clients and me for over 50 years.

Ford Motor Company (NYSE:F) is the current primary focus for my consumer sector analytics. For all these years, my mission has been to identify the companies with the highest prospect of being the profitable, and lowest risk/reward threshold for the coming months. Remember, this stock market is a cycling and ever-changing venue. The same old companies are no longer, repeatedly the leaders, year after year. For me, that means I have to dig deeper to find gold and work harder to secure the consistent profits we all are seeking. I love this work. I always have and I always will be sharing my "stuff."

Identifying the future profitable component stocks of a sector is a simple process. Most likely, you have heard these words used many times in financial articles. I focus my attention on these words, and call them "my three Ws." These three words are: What, When and Why. The components of my analytics are the companies within these sectors. Like in all sectors, each company in each sector belongs to an industry group. By valuating the component companies within each industry group I can affirm and/or discard both industry groups and companies. I keep doing this analytic process until I have identified the very best candidates for buying. The same valuation process works just as well if we are seeking to identify companies for a short sale. This work provides me with an excellent list of fundamentally sound candidates for investments. This is fundamentally the key to the important question of "what?"

Experienced technical analysis is the key to the important question of "when?" The "when" always depends on the current (bullish or bearish or neutral/transitional) cycle of the stock market itself. Investing in the best companies in a bearish cycle is just plain foolish. And shorting a company in a bullish cycle is just plain stupid. I apologize to you if my candor is a bother to you.

Now, with a little guidance and few more analytic tools, we can begin on a path of enjoying consistent annual profits.

Over the coming months, I will repeat this article on the consumer sector from time to time. I will offer updates, i.e. alerts (for buying) and warnings (for selling) for the companies listed below. The companies are a representative group of the large-cap consumer companies that should be familiar to all.

These "large cap" companies have competitors, within their industry group, that are what I call second and third-tier companies. These second and third-tier companies often have better valuations and a lower risk/reward factor to work with. So these top-tier companies always lead me to excellent alternative companies that I recommend for buying to my clients. Obviously, I am seeking very poor second and third-tier companies when I am in a bearish stock market environment.

I mentioned my three "Ws" above and still have not mentioned the why? 'Why" is a kind of conformation for me that all this analytic effort is correct and accurate. If I cannot answer the questions of why this company is a low-risk and potentially profitable investment, satisfactorily to myself, I will not recommend it as a buy or short sale to my clients.

The first obstacle is whether the company that valuates well is currently technically a buy, sell or hold? Now we are back to the "when" in investing wisely. In my work, that question is also rather easy to answer. Unfortunately, I have found that few investors have the patience and discipline to hold cash in their portfolio. Waiting sometimes for weeks for a company to be ripe for buying is not easy for most investors.

You may want to refer to my Instablog article on "My Rotation Model."

Table of Sectors: Ranking and Direction

ETF & Symbol

Ranking ( 60 - 100 ) & Direction (ascending / status quo / descending)

Most Recent Article

(Click on article for my latest posting)

Basic Materials - - SPDR (NYSEARCA:XLB)

( Click (chart) for a 15-year chart)

72 - - descending

Coming Soon


( Click (chart) for a 15-year chart)

74 - - descending

Coming Soon

Financial - - SPDR (NYSEARCA:XLF)

( Click (chart) for a 15-year chart)

76 - - descending

Latest - article

Industrials - - SPDR (NYSEARCA:XLI)

( Click (chart) for a 15-year chart)

80 - - descending

Latest - article

Technology - - SPDR (NYSEARCA:XLK)

( Click (chart) for a 15-year chart)

80 - - descending

Coming Soon

Consumer - Goods & Services - - SPDR (NYSEARCA:XLP)

( Click (chart) for a 15-year chart)

81 - - descending

You are reading it.

Health Care - - SPDR (NYSEARCA:XLV)

( Click (chart) for a 15-year chart)

78 - - descending

Latest - article

Utilities - - SPDR (NYSEARCA:XLU)

((Click (chart) for a 15-year chart)

72 - - descending

Latest - article

Gold - - SPDR (NYSEARCA:GLD) / Silver iShares

( Click (chart) for a 20-year chart)

78 - - descending

Latest - article

These rankings are conservative but the word "descending" should get your attention.

If you are an investor who is seeking dividend or monthly income, my work will help you meet your objectives of both income and modest growth. Often you receive your dividend check, and the company price is 'descending.' I suggest collecting dividends in one hand and losing price per share value on the other hand is just like shooting yourself in the foot. Your inquiries are welcome.

Eight Valuation Criteria with their Status on the Consumer Sector

Valuation Criteria


Earnings Growth:

The Consumer sector earnings peaked at in early 2010 and have declined ever since. In the last year a rebound has occurred. That explains the recent strength of this sector

Price per Share - Performance:

The Consumer (Discretionary) Services have been strong since the beginning of the 2009 rally. However, the Consumer (Staples) Goods have under performed. That explains why valuations have been so unusually strong in the Consumer Services sector.

Forward Earnings:

The bad news is that both these sectors should soon turn negative.

Forward Revenues:

The Consumer sector revenues are continuing to decline from 2010.

Forward Profit Margin:

Profit Margins have turning over the top since early 2010.

Forward Price / Earnings Ratio:

P/Es are on the decline since mid 2012.

Long Term vs. Short Term Earnings Growth:

Longer term is flat to declining. The Short term appears to be turning down?

PEG Ratio:

Consumer (Discretionary) Services is less than 1.0 and falling. Consumer (Staples) are high and likely to begin falling.

Valuation analytics is a time-consuming part of a financial analyst's day. However, the reward for the long hours is necessary if you are seeking consistent annual profits.

Valuation Analytics Table - - Large Cap - Consumer (Electric / Gas / Water) Companies



Valuation Divergence (%)

Six Months - One Year Projected from a Mean - Sigma and from the next Bullish or Bearish Inflection Point.

(These are averaged for all companies and conservative numbers )


(My General Remarks for the Consumer Sector are: I never invest when the trend is against me. Currently, the trend is bearish; therefore, in many good valuations, I prefer holding cash. )

Ford Motor Company

((Click (chart) for a 20-year chart)


Minus - 12+%

F coming lower in the coming week. It is carrying a low PEG. Cash is the prudent strategy for now.

Altira Group, Inc. (NYSE:MO)

((Click (chart) for a 20-year chart)


Hitting new highs therefore no valuation calculation can be made at this time.

MO has been in a up trend for a very long time. It is sporting a very nice dividend. Projecting a pull back at this is time would not be wise. That does not mean the company will continue it ascent.

Starbucks Corp. (NASDAQ:SBUX)

((Click (chart) for a 20-year chart)


Minus - 19+%

SBUX is very over-bought and has a long ways to fall. Take profits and hold cash.

Companies to Focus on for the Next Bullish Cycle



(My General Remarks for these Five Consumer Sector Companies

Toyota Motor Corp. (NYSE:TM)


TM is coming lower but should be a good buy in the longer-term.

Vail Resorts, Inc. (NYSE:MTN)


MTN has a lofty P/E but don't let that scare you. Another pull back is highly probable in the near-term. Definitely not a short-sale at this time.

Teekay Corp. (NYSE:TK)


TK is way off its highs and coming lower.

Netflix, Inc. (NASDAQ:NFLX)


NFLX is very far off its highs. Could it be basing? Fundamentals are saying yes.

Pandora Media, Inc. (NYSE:P)


P is and has been a future buy on my lists for quite awhile. I do suggest it will come lower in the summer.

I often suggest that second and third-tier companies also offer low risk investing. Here are a few with my longer-term positive valuations. It may be some time before any of these companies makes it back to the top of my recommendations list. Do not buy without consulting a seasoned financial analyst or contacting me by email.

Market Status

My general market opinion is that the fundamentals are overvalued. The technicals are over-bought and the consensus opinion is way too bullish. I am currently a bear because my valuations are convincingly negative, and we are in a bearish cycle; it's just that simple.

Further support for my guidance for the general market can be read in my weekly Instablog article "Wednesday - General Market Update & Commentary."


Currently, the above tables and charts present a clear and not-so-positive account of these companies and the overall market indicators. It is a fact that the stock market cycles endlessly both fundamentally and technically from bullish to bearish and then back again to be bullish. The bullish trend of these companies will be back to profit very soon. That is also a fact you can be assured of, so just be patient. Unfortunately, this is a pattern that is not well-understood or taken advantage of by most investors.

I recommend prudent caution for all these companies. The weaker companies are clearly identified with guidance above.

Within this present bearish time frame, there is nothing fundamentally (longer-term) wrong with these companies. It is simple what happens when they turn technically bearish. And is just the on-going "cycling effect" of the way the stock market works. I hope you understand and will continue to follow my work/analytics for guidance. It won't be long before I can offer you a bullish and upbeat forecast once again.

May I remind you to take a few minutes to study my longer-term charts? When buying or selling, taking a longer-term look of a security's price history is often the difference between profits and losses.


I am currently bearish on both the world economies and the general market. My more recent Instablog postings are focused on securities that should not be currently held in your portfolio. I suggest that it is vitally important for you to understand that holding cash during questionable time frames in the marketplace is a much wiser choice than holding your present positions. I can assure you that; this is definitely a "questionable" time frame. Support for some of these companies' current status will be posted this coming Saturday. My "Saturday Update" can be read weekly in my Instablog article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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