The stocks of consumer packaged goods companies performed relatively well in 2019, but will likely fall off in 2020, according to the Wall Street Journal.
The S&P 500 consumer staples subindex, which measures consumable items like household goods along with food, rose 24% as of late December. This is less than the 29% rise in the overall S&P, but much better than 2018, when it dropped 11.2%.
The Journal’s Aaron Back identifiedseveral factors in the good stock performance of consumable goods companies, including changes in management, sometimes brought about by activist shareholders, at companies like Procter & Gamble and Campbell Soup, and stock dividends from relatively stable CPG companies becoming more attractive to investors when interest rates are low.
However, Back also named factors that might tend to depress CPG performance in 2020, including: food retailers facing increased competition from discounters and passing that backward in the form of pressure on suppliers to lower prices; continued competition from private label; and the rise of e-commerce, which facilitates competition from startups and smaller companies.