Investors have shunned slow-moving consumer goods stocks in favor of high-octane technology names for most of 2018. Sectors that have underperformed this year may see some rotational buying into year end in what is a seasonally bullish period for the stock market.
Consumer goods stocks could receive a boost from rising wage growth in developed economies that is likely to support consumer purchases into 2019. "An embryonic wage cycle is appearing in Japan, U.S., Netherlands and Germany as tight labor markets force companies to raise salaries," Jefferies analyst Sean Darby said in a research note, per a CNBC article.
In addition to increasing wage growth, consumer confidence is rising. November's Conference Board Consumer Confidence Index (CCI), a measure of consumer confidence in economic activity, gave a reading of 135.7, up from 133.4 in August.
Traders who are looking for swing trading opportunities may find it worthwhile to add these three consumer goods stocks that have formed double bottom chart patterns to their watchlist. Let's explore several trading ideas that could capitalize on an end-of-year Santa Claus rally.
Molson Coors manufactures and markets beer and other beverage products. Well-known brands in the company's portfolio include Coors Light, Miller Lite, Keystone and Blue Moon. Molson Coors subsidiary Miller Coors generates roughly 70% of the company's sales and the lion's share of its operating profits. Trading at $63.07 with a market capitalization of $13.61 billion and paying an forward dividend yield of 2.62%, Molson Coors stock is down 21.15% year to date (YTD) as of Dec. 13, 2018.
Although Molson Coors' share price has trended lower throughout most of 2018, sentiment appears to have improved after the company beat analysts' third quarter earnings estimates on Oct. 31. After an initial 10% pop, the price has traded sideways and recently found support at the 50-day simple moving average (SMA). Traders who enter a long position at current levels should consider placing a stop-loss order just below the earning gap candlestick to protect capital. Take-profit orders could sit at key resistance levels at $70, $74 or $80. Alternatively, traders may choose to scale out at these prices.
Headquartered in Benton Harbor, Michigan, Whirlpool manufactures and sells home appliances and related products. The company, with a market cap of $7.49 billion, receives the majority of its revenue from laundry appliances, refrigerators and freezers. Its global brands include Whirlpool, KitchenAid, Maytag, Consul, Brastemp and Jenn-Air. As of Dec. 13, 2018, Whirlpool stock has returned -27.7 YTD but is up nearly 3% over the past month. Investors receive an attractive 3.92% dividend yield.
Whirlpool shareholders have had little to cheer about for most of 2018, with the company's share price falling 37% between January and October. The stock rallied in November before retracing to the 50-day SMA in early December. Those who want to swing trade Whirlpool should sit a stop below the Nov. 15 low and look to book profits at the $135 level, where the price is likely to encounter a confluence of resistance from a downtrend line dating back to mid-January, the 200-day SMA and the high of the July 24 gap down candlestick.
Founded in 1898, Goodyear develops, manufactures, distributes and markets tires and associated products. The Akron, Ohio-based company operates three regional business segments: Americas; Europe, Middle East and Africa (EMEA); and Asia Pacific. As of Dec. 13, 2018, Goodyear stock is down 30.45% YTD. It has a market cap of $5.1 billion and pays a 2.92% dividend yield.
After printing a YTD low of $19.11 in late October, Goodyear's share price rallied 10% in November before dipping back to test the 50-day SMA and a previous downtrend line that now acts as support. Traders who buy at the current price should place a tight stop-loss order slightly beneath the Dec. 10 low and look to exit at the $24 level – an area on the chart that finds resistance from horizontal line price action and the 200-day SMA.