As Kellogg Company (K) continues to foray into emerging markets, it recently signed an agreement to buy a Latin American snacks manufacturer.
When multi-billion dollar firms seek to merge, the temptation to use every means possible to attain approval from regulatory authorities and realize tremendous financial gains can lead to some really questionable claims being advanced to achieve that end. Today's example of junk science is our second where pseudoscientific practices have had real world legal implications. In this case, the discussion revolves around the situations that arose when pseudoscientific econometric analysis was presented by firms seeking the U.S. Department of Justice's Antitrust Division's approval to merge their businesses, but which was instead detected by the division's staff economists and subsequently challenged by the division's attorneys in legal proceedings. Here are the relevant items that apply from our checklist for detecting junk science that come to play in today's example. How to Distinguish "Good" Science from "Junk" or "Pseudo" Science Aspect Science Pseudoscience Comments Goals The primary goal of science is to achieve a more complete and more unified understanding of the physical world. Pseudosciences are more likely to be driven by ideological, cultural or commercial (money-making) goals. Some examples of pseudosciences include: astrology, UFOlogy, Creation Science and aspects of legitimate fields, such as climate science, nutrition, etc. Inconsistencies Observations or data that are not consistent with current scientific understanding generate intense interest for additional study among scientists. Original observations and data are made accessible to all interested parties to support this effort. Observations of data that are not consistent with established beliefs tend to be ignored or actively suppressed. Original observations and data are often difficult to obtain from pseudoscience practitioners, and is often just anecdotal. Providing access to all available data allows others to independently reproduce and confirm findings. Failing to make all collected data and analysis available for independent review undermines the validity of any claimed finding. Here's a recent example of the misuse of statistics where contradictory data that would have avoided a pseudoscientific conclusion was improperly screened out, which was found after all the data was made available for independent review.
Here are four low-beta consumer staples stocks (beta less than 0.75) that boast a Zacks Rank #1 (Strong Buy) or #2 (Buy). The search was also narrowed down with a Value score of A.
Two Consumer Staples companies with attractive dividend yields and solid growth potential are featured as this week???s Growth and Income picks (SYY, TATYY).
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The consumer staples sector, which has been performing well over the past few months buoyed by rising consumer confidence and improving economy, fell 0.9% yesterday. Let us look at these five stocks that certainly have bright prospects to ride out the impending volatility.
These five consumer staple stocks flaunt a Zacks Rank #1 or 2, with a Growth Style Score of "A" and certainly have bright prospects to ride out the impending volatility.
The world economy seems to have recovered from the initial Brexit jolt, but uncertainties surrounding the Fed's decision of a rate hike and other global issues still exist.
The Zacks Analyst Blog Highlights: Kraft Heinz, Sysco, Tyson Foods, Pinnacle Foods and Coty
Sinking food prices, while good for the consumer, is devastating for almost everyone else in the supply chain from the farmer all the way to the grocers. Farmers suffer as their key input cost, labor, is actually increasing in many states from the rash of minimum wage hikes around the country while fuel seems to move wildly with any number of daily rumors about production freezes in the middle east. Meanwhile, grocers suffer as already thin margins get compressed even further as existing inventories get marked down. Food prices have come under extreme pressure in 2016 due primarily to lower Chinese consumption resulting from a weak Chinese economy and a strong U.S. dollar. This slack in demand has resulted in massive supply gluts for several commodities as producers failed to adjust supply quickly enough to meet new levels of demand. In fact, the USDA recently provided a $20mm "bailout" to cheese producers and reports have surfaced that milk producers have been dumping excess milk on fields. With the base inputs of corn, wheat and soybeans all tanking, food deflation has been pervasive with almost every commodity down substantially YoY. Proteins, which represent nearly 20% of the typical consumer's shopping basket, are trending flat to down 8% so far in 2016. Dairy and grains are down mid-single digits YoY while egg prices have crashed as suppliers added tons of excess egg-laying capacity in response to last year's price spike related to the avian flu outbreak in the Midwest. Fresh fruit and vegetable prices have held up better presumably because consumption is less dependent on the export market. Meanwhile, alcohol prices continue to be the most stable of pretty much any item in the typical shopper's basket. Farmers are among the hardest hit when food prices decline. In fact, we recently wrote about how sinking ag commodity prices in the Midwest were resulting in substantial declines in ag land prices and farmer incomes which then translate into an increase in farmer credit defaults (see "Farmland Bubble Bursts As Ag Credit Conditions Crumble"). Within that post we noted that farmland prices in Chicago's 7th District (IL, IN, IA, MI, WI) declined in 2014 and 2015 after only dropping in 4 other years since 1965. As the Wall Street Journal pointed out, farmers have been forced to dump "millions of pounds of excess milk on to fields" while the USDA provided a $20mm "bailout" to cheese producers. The glut is so severe in some places that dairy farmers have been dumping millions of pounds of excess milk onto fields. The U.S. Department of Agriculture just bought $20 million worth of cheese in response to hard-hit dairy farmers’ requests. The cheese was given to food banks and others through USDA nutrition-assistance programs. Ben Moore, a sixth-generation farmer who grows corn and soybeans on some 5,000 acres in Indiana and Ohio, said 2016 is shaping up to be his least profitable year in 20 years. Facing weak crop prices, he is making do with his current tractors and combines rather than upgrading his equipment, and is pushing for lower prices on pesticides, seeds and fertilizer. On Monday, corn futures, which peaked in 2012 at more than $8 a bushel, closed at $3.11 ¾ a bushel, a seven-year low, on the Chicago Board of Trade. “We cannot withstand $4 a bushel corn,” Mr. Moore said. Farmers who had built a nest egg after a robust period earlier this decade now have exhausted those reserves, said Karl Setzer, a market analyst for MaxYield Cooperative, a West Bend, Iowa, grain marketer. “The guys that are heavily leveraged and those who don’t have a plan of action will suffer for a while.” But farmers aren't the only ones to suffer during a deflationary food environment. Grocers also suffer as tiny margins get compressed even further as existing inventories get marked down to prevailing market prices. Falling costs are taking a toll on many food retailers. Grocery stores already have thin profit margins and deflation tends to reduce the value of their inventory. To stay competitive, they must cut prices on existing goods before lower-priced staples land on the loading dock, and have fewer opportunities to raise prices. At least six national food retailers, including Costco Wholesale Corp. and Whole Foods Market Inc., and four of the five largest publicly traded food distributors, including Sysco Corp. and US Foods Holding Corp., have reported that their margins suffered in the last quarter because of food deflation, the first time analysts can recall so many grocers singling out deflation as a big problem. “Deflation is kind of the elephant in the room,” Dennis Eidson, chief executive of SpartanNash Co., which operates 160 grocery stores from Colorado to Ohio and distributes food to 1,900 retailers across the country, told investors this month. Meanwhile, consumers are the key beneficiaries of food price deflation. With weak U.S. consumers shunning eating out more and more over the past year.... The combination of stagnant real earnings and lower retail food prices have provided the necessary incentives to drive the highest QoQ increase in real consumption of "food for home consumption" since the 80s.
5 consumer staples stocks that are quite reliable in the volatile global economic backdrop.
Let us focus on one consumer staples stock ??? Sysco Corp. (SYY) ??? which can be a good choice for investors, amid global issues.
Zacks Value Investor Highlights: Walmart, Macy's, Unitedhealth Group and Sysco
Pinnacle Foods, Inc. (PF) has always been focused on maintaining its long-term growth outlook. Most recently, this food company has decided to relocate EVOL manufacturing operations to an existing Pinnacle facility in Fayetteville, AR, consistent with its growth outlook.
We issued an updated research report on Kellogg Company (K) on Aug 22.
The J.M. Smucker Company (SJM) posted better-than-expected earnings in the first quarter of fiscal 2017. However, sales missed expectations. The company also slashed its sales outlook for fiscal 2017.