Soup, Ketchup, Cheerios and the Fiscal Cliff
- Posted by Greg Harmon
- on January 2nd, 2013
Apparently when we got right down to the last 2 weeks of the year, the world had decided that some of their favorite stocks of 2012 were going to succumb to the fiscal cliff. I am not speaking of some high flying names like Apple or Amazon, but rather the rocks of your portfolio, Campbell’s Soup, $CPB, HJ Heinz, $HNZ and General Mills, $GIS. These stocks each lost 5% from December 18th through to the December 31st. Let me remind you that these companies make things. Things
that people buy no matter what the economic environment. Soup, Cheerios, and Ketchup. Nobody gives these up. My dad eats a half a box of Cheerios everyday himself! And these are massive companies between 10 and 30 billion dollars. What are they doing getting a 5% haircut in 2 weeks? What is that you say? Its the dividend. Each has over a 3.3% dividend yield so they were a prime target for sale with the potential for a dividend tax hike. Hmmm. Did you miss the part where these
companies are massive and sell things that people buy and consume everyday? Dividend tax rates were never going to 100%. So the congressy people put a fence around the cliff so we do not fall off and what happens? Rally! But lucky for you these three have not fully recovered their 5% drops. They are close but that pullback did wonders for the weekly charts. Heinz above and Campbell’s Soup below, both bounced off of the 20 week Simple Moving Average (SMA), held their
Relative Strength Indexes (RSI) in bullish territory and now look ready to resume their trends higher. Maybe you should be looking at these pullbacks as an opportunity to enter these stellar stocks that you may have missed earlier?
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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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