August retail sales in both the US and Europe were strong hitting record levels. Part of it is a naturally bounce back from depressed levels during the early lockdowns due to Covid-19. As time has progressed our health care sector has become better at treating Covid-19 patients causing the second waves of Covid-19 in the US and Europe to have smaller impact on the health care sector. Only restrictions are enforced and thus retail sales activity can function normally again. On top of that many households are spending much less on travelling and leisure activities than before. Even gasoline consumption is still much lower due to work-from-home increasing disposable income for households. Our theory is that households are reallocating their spending towards consumer goods and delivery services of food and e-commerce packages, and not so much the big-ticket items such as cars.
Go for high quality and brand companies
Zalando’s Q3 numbers yesterday and raised FY20 outlook confirms that consumer goods are doing well, but also Tesco in the UK showed good results the other day. Consumer goods companies such as Nike has also been showing impressive levels of growth since the bottom in March. As a travel and leisure activities remain significantly below normal levels the bonanza in consumer goods will continue. The table below shows high quality consumer goods names (highest return on invested capital) and fastest growing consumer goods companies. Our assumption is that companies with high quality will be better to navigate the uncertain times and companies with a strong brand will be able to lift sales better online, so we recommend investors to incorporate those factors when getting exposure to consumer goods companies.
High quality consumer goods companies (ranked on ROIC)
| Name | Mkt. Cap. USD mn. | Return 5Y | ROIC | P/E |
| Kimberly-Clark Corp | 51,263 | 54.56 | 33.35 | 19.96 |
| Colgate-Palmolive Co | 67,512 | 34.38 | 32.79 | 26.13 |
| NVR Inc | 16,099 | 177.12 | 31.38 | 20.91 |
| Reynolds Consumer Products Inc | 6,494 | 30.50 | ||
| Lululemon Athletica Inc | 44,038 | 523.39 | 30.23 | 80.60 |
| Monster Beverage Corp | 41,754 | 74.43 | 28.00 | 37.08 |
| Clorox Co/The | 26,828 | 101.16 | 27.83 | 28.91 |
| Booking Holdings Inc | 73,249 | 37.15 | 26.04 | 30.97 |
| Persimmon PLC | 10,821 | 80.89 | 25.44 | 12.36 |
| Herbalife Nutrition Ltd | 7,506 | 82.82 | 23.33 | 16.76 |
| Hermes International | 93,936 | 134.36 | 22.90 | 71.06 |
| boohoo Group PLC | 5,487 | 928.09 | 22.26 | 47.98 |
| Moncler SpA | 10,956 | 132.33 | 21.97 | 35.51 |
| Deckers Outdoor Corp | 6,873 | 294.56 | 21.71 | 23.89 |
| Hershey Co/The | 29,853 | 66.97 | 21.42 | 24.51 |
| Taylor Wimpey PLC | 5,720 | -14.80 | 20.80 | 9.93 |
| Levi Strauss & Co | 6,180 | 20.65 | 34.59 | |
| Pandora A/S | 7,707 | -25.71 | 20.63 | 33.46 |
| Garmin Ltd | 18,766 | 216.71 | 20.49 | 22.82 |
| adidas AG | 65,358 | 285.76 | 20.00 | 96.78 |
| Brown-Forman Corp | 35,992 | 100.45 | 19.86 | 43.31 |
| eBay Inc | 36,450 | 121.34 | 18.39 | 18.28 |
| Royal Unibrew A/S | 5,062 | 194.18 | 18.26 | 28.90 |
| Boston Beer Co Inc/The | 11,233 | 307.64 | 17.57 | 80.90 |
Source: Bloomberg and Saxo Group
High growth consumer goods companies (ranked on 1-year revenue growth)
| Name | Mkt. Cap. USD mn. | Return 5Y | Rev. growth 1Y | P/E |
| Etsy Inc | 16,651 | 928.30 | 136.75 | 113.83 |
| HelloFresh SE | 9,326 | 122.65 | 38.20 | |
| Delivery Hero SE | 22,546 | 94.53 | ||
| Wayfair Inc | 29,006 | 670.77 | 83.71 | |
| Fiverr International Ltd | 5,452 | 81.88 | ||
| Farfetch Ltd | 9,075 | 74.27 | ||
| Beyond Meat Inc | 12,076 | 68.53 | 6738.21 | |
| MercadoLibre Inc | 57,682 | 1138.95 | 61.10 | |
| Chewy Inc | 24,197 | 47.36 | ||
| boohoo Group PLC | 5,487 | 928.09 | 44.51 | 47.98 |
| Boston Beer Co Inc/The | 11,233 | 307.64 | 42.00 | 80.90 |
| Grubhub Inc | 6,817 | 146.60 | 41.29 | |
| Amazon.com Inc | 1,598,113 | 498.42 | 40.23 | 122.67 |
| Ocado Group PLC | 23,486 | 596.49 | 34.98 | |
| Zalando SE | 26,790 | 188.38 | 27.38 | 189.13 |
| Clorox Co/The | 26,828 | 101.16 | 21.88 | 28.91 |
| Prosus NV | 148,708 | 18.97 | 38.78 | |
| Campbell Soup Co | 14,636 | 9.84 | 18.43 | 16.30 |
| eBay Inc | 36,450 | 121.34 | 18.24 | 18.28 |
| Conagra Brands Inc | 18,197 | 29.81 | 12.06 | 14.69 |
| Nomad Foods Ltd | 5,019 | 50.06 | 11.38 | 22.14 |
| J M Smucker Co/The | 13,361 | 14.65 | 10.84 | 14.73 |
| Church & Dwight Co Inc | 22,540 | 125.30 | 10.64 | 32.09 |
| ASOS PLC | 6,827 | 83.22 | 10.26 | 98.92 |
| DR Horton Inc | 28,263 | 169.55 | 9.86 | 14.47 |
Source: Bloomberg and Saxo Group
