Coke, P&G, Walmart -- Buy Them Separately or Through an ETF?

The consumer represents about 65% of the U.S. economy. That means if you are an investor you should always have some assets allocated to stocks in the consumer staples sector.

But how much do you want to own? One way of spreading the risk is to own the Consumer Staples Select Sector SPDR Fund (XLP) , which consists of 38 stocks.

This exchange-traded fund has gained 1.8% year to date after setting an all-time high of $51.96 on Feb. 26. Of its 38 stocks, three familiar names are among the ETF's top six components. They are also components of the Dow Jones Industrial Average (INDU)  that, along with the S&P 500 , have declined so far this year.

Those familiar names are Coca-Cola (KO) , Procter & Gamble (PG) and Walmart (WMT) . The latter two are members of the 2016 Dogs of the Dow, which are outperforming with year-to-date gains of 2.3% and 8.4%, respectively.

Are you better off owning these three stocks alone or holding them through the ETF? Let's take a look at the scorecard for the consumer staples ETF and these three components with their ETF weightings.

 

Here's the weekly chart for the consumer staples ETF.


Courtesy of MetaStock Xenith

The consumer staples ETF closed Tuesday at $51.41, up 1.8% year to date and is 8.5% above its 2016 low of $47.39 set on Jan. 20. The weekly chart is positive with the ETF above its key weekly moving average of $50.43 and well above its 200-week simple moving average of $43.32. The weekly momentum reading is projected to rise to 74.02 this week up from 68.41 on Feb. 26.

Investors looking to buy XLP should place a good till canceled limit order to buy the ETF if it drops to $49.53 and $46.64, which are key levels on technical charts until the end of this week and to the end of 2016, respectively. Investors looking to reduce holdings should place a GTC limit order to sell the ETF if it rises to $51.78 and $55.07, which are key levels on technical charts until the end of March and to the end of 2016, respectively.

Here's the daily chart for Coca-Cola (9.23% ETF weighting).


Courtesy of MetaStock Xenith

Coca-Cola closed Tuesday at $43.69, up 1.7% year to date and is 7.2% above its 2016 low of $40.75 set on Jan. 20. The weekly chart is positive with the stock above its key weekly moving average of $43.00 and above its 200-week simple moving average of $40.25. The weekly momentum reading is projected to rise to 72.59 this week up from 67.06 on Feb. 26.

Investors looking to buy Coca-Cola should place a good till canceled limit order to buy the stock if it drops to $41.47 and $41.29, which are key levels on technical charts until the end of 2016 and the end of March, respectively. Investors looking to reduce holdings should place a GTC limit order to sell the stock if it rises to $44.69 and $46.46, which are key levels on technical charts until the end of March and the end of June, respectively.

Here's the weekly chart for Procter & Gamble (11.95% ETF weighting).


Courtesy of MetaStock Xenith

Procter & Gamble closed Tuesday at $81.23, up 2.3% year to date and is 9.1% above its 2016 low of $74.46 set on Jan. 20. The weekly chart is positive with the stock above its key weekly moving average of $80.15 and above its 200-week simple moving average of $77.80. The weekly momentum reading is projected to rise to 77.87 this week up from 76.33 on Feb. 26.

Investors looking to buy Procter & Gamble should place a good till canceled limit order to buy the stock if it drops to $75.58 and $71.62, which are key levels on technical charts until the end of March and the end of 2016, respectively. Investors looking to reduce holdings should place a GTC limit order to sell the stock if it rises to $87.57, which is a key level on technical charts until the end of June. A key level of $79.69 should remain a magnet until the end of March.

Here's the daily chart for Wal-Mart 9 5.69% ETF weighting).


Courtesy of MetaStock Xenith

Walmart closed Tuesday at $66.46, up 8.4% year to date and is 10.4% above its 2016 low of $60.20 set on Jan. 20. The weekly chart is neutral with the stock above its key weekly moving average of $64.93 but below its 200-week simple moving average of $73.86. The weekly momentum reading is projected to slip to 77.18 this week down from 77.44 on Feb. 26.

Investors looking to buy Walmart should place a good till canceled limit order to buy the stock if it drops to $57.51, which is a key level on technical charts until the end of March. Investors should reduce holdings should place a GTC limit order to sell the stock if it rises to $81.05, which is a key level on technical charts until the end of 2016.

 

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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