Leading Independent Investment Research, Morningstar, Inc.

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Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

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Thematic (Sector/Industry)

<ul><li class="p1">Seismic changes are affecting the consumer packaged goods industry as consumers are becoming less brand loyal and supermarkets are under attack from hard discounters and online competition.</li><li class="p1">The prolonged period of slow economic growth has conditioned consumers to be more price sensitive, and the emergence of the e-commerce channel is rapidly changing consumers' shopping behaviours.</li><li class="p2">In our opinion, the strongest antidote to these pressures is a strong brand.</li><li class="p2">In this report, we quantify the power of each company's brand by its ability to take pricing, using a number of metrics, and conclude that while brand strength varies widely across the consumer packaged goods space, beverages and tobacco generally enjoy stronger positions.</li><li class="p2">We also dive deep into cost advantages and show that while some of the large diversified CPG firms may generate economies of scope, economies of scale are more prevalent in industries with a homogeneous manufacturing process.</li></ul><p class="p2">Lead Analysts: Adam Fleck, CFA; Philip Gorham, CFA, FRM; R.J. Hottovy, CFA; Erin Lash, CFA; Ken Perkins, CFA</p><p class="p2">Full report below the fold...&nbsp;</p>

Seismic changes are affecting the consumer packaged goods industry as consumers are becoming less brand loyal and supermarkets are under attack from hard discounters and online competition.The prolonged period of slow economic growth has conditioned consumers to be more price sensitive, and the emergence of the e-commerce channel is rapidly changing consumers' shopping behaviours.In our opinion, the strongest antidote to these pressures is a strong brand.In this report, we quantify the power of each company's brand by its ability to take pricing, using a number of metrics, and conclude that while brand strength varies widely across the consumer packaged goods space, beverages and tobacco generally enjoy stronger positions.We also dive deep into cost advantages and show that while some of the large diversified CPG firms may generate economies of scope, economies of scale are more prevalent in industries with a homogeneous manufacturing process.Lead Analysts: Adam Fleck, CFA; Philip Gorham, CFA, FRM; R.J. Hottovy, CFA; Erin Lash, CFA; Ken Perkins, CFAFull report below the fold...&nbsp;

Morningstar Consumer Observer: Shopping for the CPG Brands Best Positioned for a New Era in Commerce

Founder Evidente. Top rated quantitative analyst, Evidente

Sam Ferraro

Founder Evidente. Top rated quantitative analyst

Evidente

Evidente is an independent financial education firm that delivers innovative financial advice to wholesale investors, including active long only funds, hedge funds, pension funds, and sovereign wealth funds, in Australia and globally.  Drawing on academic research in asset pricing, behavioural finance and portfolio construction, Evidente provides wholesale investors with commercial solutions to stock selection and asset allocation decisions across equities and other asset classes.

<ul><li>Annualised volatility in the S&amp;P500 spiked to 27% in August, its highest level since November 2011. &nbsp;Nonetheless, the 6 month moving average of volatility of 14% remains broadly in line with historical trends over the sweep of the past 45 years.</li><li>The positive surprise on 2Q US real GDP concealed the five year long stall in nominal GDP growth.&nbsp; The US Federal Reserve&rsquo;s unwillingness to combat disinflation has contributed to the growth stall.&nbsp; Investors remain unnerved by the Fed&rsquo;s willingness to tighten monetary policy at a time when inflation continues to undershoot its 2% target.</li><li>I expect financial market volatility to remain high until the Fed more clearly enunciates the goals of monetary policy and why it remains indifferent to achieving its inflation target.</li><li>In Australia, the poor 2Q capex survey confirmed that the economy is on the precipice of a 20% slump in business investment in FY2015/16.&nbsp; The long and drawn out transition from mining to non-mining capex continues to weigh on growth and frustrate the RBA.&nbsp; In my view, the re-balancing of growth will need an assist from further monetary stimulus.</li></ul>

Annualised volatility in the S&amp;P500 spiked to 27% in August, its highest level since November 2011. &nbsp;Nonetheless, the 6 month moving average of volatility of 14% remains broadly in line with historical trends over the sweep of the past 45 years.The positive surprise on 2Q US real GDP concealed the five year long stall in nominal GDP growth.&nbsp; The US Federal Reserve&rsquo;s unwillingness to combat disinflation has contributed to the growth stall.&nbsp; Investors remain unnerved by the Fed&rsquo;s willingness to tighten monetary policy at a time when inflation continues to undershoot its 2% target.I expect financial market volatility to remain high until the Fed more clearly enunciates the goals of monetary policy and why it remains indifferent to achieving its inflation target.In Australia, the poor 2Q capex survey confirmed that the economy is on the precipice of a 20% slump in business investment in FY2015/16.&nbsp; The long and drawn out transition from mining to non-mining capex continues to weigh on growth and frustrate the RBA.&nbsp; In my view, the re-balancing of growth will need an assist from further monetary stimulus.

United States

Walgreens Boots Alliance, Inc., operates retail drugstores that offer a wide variety of prescription and non-prescription drugs as well as general goods. Walgreens' also offers health services, including primary and acute care, wellness, pharmacy and disease management services and health and fitness.

Performance Food Group Company markets and distributes food and food-related products. The Company offers foods such as meats, fruits, vegetables, and desserts, as well as supplies paper products, including pizza boxes, disposable napkins, plates, and cups. Performance Food Group operates in the United States.

BJ's Wholesale Club Holdings, Inc. operates as a warehouse club. The Company delivers electronics, furniture, fitness, video games, health, toys, home decor, computers, landscaping, jewelry, and grocery products. BJ's Wholesale Club Holdings serves customers in the United States.

US Foods Holding Corp. operates as a holding company. The Company, through its subsidiaries, provides catering services. US Foods Holding serves healthcare, hospitality, educational, government facilities, and other sectors in the United States.

Casey's General Stores, Inc. operates convenience stores in the Midwest.  The Company's stores, operating under the name Casey's General Store, carry a selection of food, beverages, tobacco products, health and beauty aids, automotive products, and other non-food items, as well as sells gasoline.

PriceSmart, Inc. owns and manages international merchandising businesses. The Company licenses and owns membership stores using the trade name PriceSmart and PriceCostco. PriceSmart's international market consists of Latin America and Asia. The Company also operates domestic merchandising programs, including its Auto Referral Program and its Travel Program.

Weis Markets, Inc. operates retail food markets in Pennsylvania, Maryland, New Jersey, New York, Virginia, and West Virginia. The Company also operates the SuperPetz pet supply chain of stores.

Grocery Outlet Holding Corp. retails grocery products. The Company owns and operates grocery stores and offers dairy, meat, vegetables, fruits, and health supplements. Grocery Outlet Holding serves customers in the United States.

Chefs' Warehouse Inc. is a premier distributor of specialty food products in the United States. The Company is focused on serving the specific needs of chefs who own and/or operate restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools and specialty food stores.

The Andersons, Inc. merchandises grain, operates grain elevator facilities, distributes wholesale agricultural fertilizer, and distributes agricultural inputs to dealers and farmers.  The Company also manufactures lawn fertilizer and corncob-based products, and purchases, sells, repairs, and leases railcars. In addition, The Andersons operates retail stores and a distribution center.

Alibaba Health Information Technology Limited is an integrated healthcare information and content service provider. The Company uses product identification, authentication, and tracking system data for its healthcare information.

LAWSON, INC. operates a chain of convenience stores in Japan. The Company sells a variety of products including fast food, beverages, snacks, magazines, newspapers, and sundry goods.

CP Axtra Public Company Limited operates a retail discount store chain. The Company sells food and consumer products to its registered customers including wholesalers, retailers, small businesses, caterers, and private individuals who hold its member cards. CP Axtra serves customers in Thailand.

PT Sumber Alfaria Trijaya Tbk operates a chain of retail supermarkets.

President Chain Store Corp. operates seven-eleven convenience stores throughout Taiwan.  These chain stores also provide bill-payment service, ATM service, and photo development service.  The Company's other business areas include retail, logistics, and retail information system.

Colruyt SA retails goods and offers computer and printing services.  The Company retails food and non-food items through Colruyt supermarkets, and Coccinelle, UGA, and Codi Cash supermarkets and cash and carry stores.  It retails toys, baby products, and school supplies through Dreamland stores. Colruyt markets computers and offers programming services.

Carrefour SA operates chains of supermarkets, hypermarkets, discount, cash and carry, and frozen food stores in Europe, the Americas, and Asia.

J Sainsbury plc retails food.  The Company operates Sainsbury supermarkets in the United Kingdom, convenience stores, an Internet-based home delivery service, and Sainsbury Bank.  The Bank offers saving accounts, credit cards, mortgages, insurance products, and consumer loans.

Axfood AB is a food retailer and wholesaler.  The Company owns and operates supermarkets, food discount stores, distribution centers, and warehouses. Axfood owns Hemkop, Willys, Willys Hemma, and Dagab, and supports the Spar, Tempo, and Vivo stores, which are privately owned and operated through franchise agreements, in Sweden.

BIM Birlesik Magazalar A.S. operates food and basic consumer goods discount stores in Turkey.  The Company provides an assortment of private label products.

Sprouts Farmers Market, Inc. operates a chain of retail grocery stores. The Company offers meats, cheese, dairy products, bakery, beer and wine, bulk foods, vitamins, and supplements. Sprouts Farmers Market serves customers throughout the United States.

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Sprouts Farmers Market (SFM US)

Morningstar Consumer Observer: Shopping for the CPG Brands Best Positioned for a New Era in Commerce

Seismic changes are affecting the consumer packaged goods industry as consumers are becoming less brand loyal and supermarkets are under attack...

Morningstar, Inc.

Weekly Impressions

Annualised volatility in the S&P500 spiked to 27% in August, its highest level since November 2011. Nonetheless, the 6 month moving average...

Sam Ferraro

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