Consumer Staples Stocks Are Holiday Laggards

NEW YORK ( TheStreet) -- It's the day after Christmas and all through the house we see evidence of consumer products and a tablet without a mouse. There are half full glasses of alcohol cheer, and empty bottles of dad's favorite beer. There are leftover cans of our favorite soft drink with dirty glasses left on the sink. The stockings were emptied of candy and stuff, from soaps to toothpaste to perhaps an ear muff. When accessing the sector we find overvalued stocks with charts that look like toppling blocks. Merry Christmas and a Happy New Year!

The consumer staples sector is the second most overvalued among the 16 sectors covered at www.ValuEngine.com, overvalued by 15.4%. The alcoholic beverage industry is 12.1% overvalued with soft drinks 9.2% overvalued while cosmetics and toiletries are 8.0% undervalued.

In tracking the sector technically I look at the daily and weekly charts for the Consumer Staples Sector SPDR Fund ( XLP).

The daily chart for XLP ($35.06) gapped below its 50-day simple moving average at $35.50 on Friday, but stayed above its 200-day SMA at $34.91 on Monday. The daily chart profile is negative, which is a technical warning that consumer staples stocks have lagged during the 2012 holiday shopping season.

The weekly chart profile (not shown) provides another warning for the sector given a close this week below the five-week modified moving average at $35.57. My annual value level is $32.87 with a weekly pivot at $35.41 and monthly risky level at $36.39.

Chart Courtesy of Thomson/Reuters

In prior posts covering the consumer staples sector on Aug. 6 I wrote, Book Profits in Overvalued Consumer Staples , and on Sept. 18 wrote, Continue to Book Profits in Consumer Staples . Today I profile two consumer staples stocks rated strong buy and seven that are rated buy giving investors and traders my latest buy-and-trade guidance.

Reading the Table

OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.

Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.

Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.

Risky Level: Price at which to enter a GTC limit order to sell on strength.

Ambev ( ABV) ($41.96): Set a multi-year high at $44.63 on April 20. The stock is rated strong buy, is 19.2% overvalued and has an elevated trailing 12 months price-to-earnings ratio of 27.2. The daily chart is neutral with the 50-day and 200-day SMAs at $41.06 and $39.56. The weekly chart shifts to negative with a close this week below the five-week MMA at $41.32. My monthly value level is $38.03 with a weekly pivot at $41.98 and semiannual risky level at $43.14.

Anheuser Busch ( BUD) ($87.54): Set a multi-year high at $91.20 on Oct. 5. The stock is rated strong buy, is 10.2% overvalued and has a slightly elevated trailing 12 months P/E of 18.9. The daily chart is negative with the 50-day and 200-day SMAs at $85.98 and $78.92. The weekly chart stays positive with a close this week above the five-week MMA at $86.78. My quarterly value level is $76.90 with a weekly pivot at $87.00 and monthly risky level at $89.28.

Colgate Palmolive ( CL) ($105.05): Set a multi-year high at $110.97 on Oct. 17. The stock is rated buy, is 6.7% overvalued and has a slightly elevated trailing 12 months P/E of 19.8. The daily chart is negative with the 50-day and 200-day SMAs at $106.54 and $103.07. The weekly chart stays negative with a close this week below the five-week MMA at $106.09. My semiannual value level is $101.69 with a weekly risky level at $108.33.

General Mills ( GIS) ($41.00): Set a multi-year high at $41.88 on Dec. 19. The stock is rated buy, is 0.4% overvalued and has a reasonable trailing 12 months P/E of 15.8. The daily chart is negative with the 50-day and 200-day SMAs at $40.35 and $39.24. The weekly chart shifts to negative with a close this week below the five-week MMA at $40.69. My quarterly value level is $40.34 with a weekly risky level at $41.33.

Kellogg ( K) ($56.14): Set its 2012 high at $57.21 on Dec. 12. The stock is rated buy, is 3.9% overvalued and has a reasonable trailing 12 months P/E of 16.5. The daily chart is neutral with the 50-day and 200-day SMAs at $54.42 and $51.56. The weekly chart is overbought with the five-week MMA at $55.19. My quarterly value level is $54.03 with a weekly risky level at $57.57.

Kimberly-Clark ( KMB) ($83.79): Set a multi-year high at $88.25 on Aug. 3. The stock is rated buy, is 3.9% overvalued and has a reasonable trailing 12 months P/E of 16.1. The daily chart is negative with the 50-day and 200-day SMAs at $85.11 and $81.95. The weekly chart remains negative with a close this week below the five-week MMA at $84.76. My annual value level is $80.29 with a quarterly pivot at $83.54 and weekly risky level at $86.94.

Coca-Cola ( KO) ($36.73): Set a multi-year high at $40.67 on July 31. The stock is rated buy, is 7.6% undervalued and has a slightly elevated trailing 12 months P/E of 18.5. The daily chart is negative with the 50-day and 200-day SMAs at $37.24 and $37.72. The weekly chart shifts to negative with a close this week below the five-week MMA at $37.29. My semiannual value level is $29.30 with a semiannual pivot at $36.63 and weekly risky level at $37.39.

Pepsico ( PEP) ($69.43): Set a multi-year high at $73.66 on Aug. 27. The stock is rated buy, is 4.6% overvalued and has a reasonable trailing 12 months P/E of 16.9. The daily chart is negative with the 50-day and 200-day SMAs at $69.59 and $69.18. The weekly chart shifts is neutral with a close this week below the five-week MMA at $69.79. My quarterly value level is $68.44 with weekly risky level at $70.20.

Procter & Gamble ( PG) ($68.52): Set a multi-year high at $70.99 on Dec. 12. The stock is rated buy, is 2.6% overvalued and has a reasonable trailing 12 months P/E of 17.5. The daily chart is negative with the 50-day and 200-day SMAs at $68.87 and $66.32. The weekly chart shifts is negative with a close this week below the five-week MMA at $68.95. My monthly value level is $65.49, with a weekly pivot at $68.36 and quarterly risky level at $70.38.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at RSuttmeier@Gmail.com.

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