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Stocks of fast moving consumer goods companies like ITC Ltd and Marico Ltd that have corrected downwards by 5-8% over the last one month are likely to rebound next week on value buying. ITC is trading at about 24 times its two year forward earnings. Marico has also fallen over last month. Both these stocks are value buys at this time. They are likely to rebound from next week onwards. Notwithstanding a weakening volume trajectory over the trailing three quarters, ITC's earnings visibility remains strongest across the FMCG pack. This is a direct outcome of its dominant market share and strong pricing power. FMCG is not just a defensive sector in India but also a growth sector. As a result, stocks have done well even during bull markets led by investment cycle stocks. It also emphasised that, except in the case of Hindustan Unilever Ltd, there were only four years in which stocks from the FMCG space have given negative returns in the last 20 years. FMCG (ex-HUL) gave negative returns in only four of the past 20 years. These include two years of droughts in the early 2000s and the global financial crisis of 2008. ITC, Emami, Marico and Godrej Consumer as its top picks from the sector.
Stocks of fast moving consumer goods companies like ITC Ltd and Marico Ltd that have corrected downwards by 5-8% over the last one month are likely to rebound next week on value buying. ITC is trading at about 24 times its two year forward earnings. Marico has also fallen over last month. Both these stocks are value buys at this time. They are likely to rebound from next week onwards. Notwithstanding a weakening volume trajectory over the trailing three quarters, ITC's earnings visibility remains strongest across the FMCG pack. This is a direct outcome of its dominant market share and strong pricing power. FMCG is not just a defensive sector in India but also a growth sector. As a result, stocks have done well even during bull markets led by investment cycle stocks. It also emphasised that, except in the case of Hindustan Unilever Ltd, there were only four years in which stocks from the FMCG space have given negative returns in the last 20 years. FMCG (ex-HUL) gave negative returns in only four of the past 20 years. These include two years of droughts in the early 2000s and the global financial crisis of 2008. ITC, Emami, Marico and Godrej Consumer as its top picks from the sector.
