The Consumer Staples Sector Is No Place To Hide

Jon Alternative Media, Blogosphere, Economy

Authored by Bryce Coward via Knowledge Leaders Capital blog,
The Consumer Staples sector is often viewed as a safe haven; a sector that, because of its inherent cash flow stability, market participants can turn to as a place of refuge when things get shaky. Yet, persistent fundamental decline among North American Staples companies may well be throwing a wrench in these companies’ abilities to weather a broad market downturn.
In this post we’ll briefly touch on financial statement and valuation indicators that suggest Staples may not be as risk averse as they used to be.
One highly important quality factor is long-term debt as a percent of capital.
As the first chart below demonstrates, North American Staples companies have been loading up on debt year after year for the entirety of this recovery. Long-term debt as a percent of capital is now at levels not seen in at least 18 years.

This post was published at Zero Hedge on Nov 3, 2017.