I Have a Sleeper Industry For You - Agricultural Operations
At the moment, the Consumer Staples Sector may be the worst place to shop for a top Zacks Rank industry.
Why?
Overvaluation! Because the S&P500 Consumer Staples sector has a forward 12-month P/E ratio of 19.76, while the high profit margin, cash flow rich Info Tech sector has a 19.10. No sector is more richly priced.
In comparison, the overall S&P500 large cap index has a forward 12-month P/E of 16.9. In simple terms, the slow growing, defensive Staples sector is likely to be +17% overvalued to the broad S&P500. A sector or industry rotation away from Staples looks to be in the cards. The Finance sector --with more Fed rates hike and Trump stimulus on the way to pad profits down the road-- has a forward 12-month P/E of 14.28.
Buy Finance stocks and sell Staple stocks, right?
However, I have found a sleeper industry in there -- Agricultural Operations.
This 6-company Zacks Industry is currently ranked #39 out of 265 (top 15%). It was #44 out of 265 just before Christmas. Check out the new Zacks Heat Map on all of our industries to see. The path of rising industry estimates goes back a few months. Agricultural commodity price fundamentals put in a bottom early in 2016, along with the WTI oil price. Now, Materials and Energy sector companies are getting a bid, driving up shares nicely.
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Fresh Del Monte Produce, Inc. (FDP): Free Stock Analysis Report
Calavo Growers, Inc. (CVGW): Free Stock Analysis Report
Archer-Daniels-Midland Company (ADM): Free Stock Analysis Report
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