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ConsumerDiscretionary
XiaoLong Cao, Jessleen Dhaliwal, Tamir Gantumur, Ling Yee Wong, Jefferson Ye,
Richard Liu
Group 3:
What is Consumer Discretionary?
∗ The companies in this sector produce and sell nonessential goods and services for the public.
∗ Walt Disney Co. (DIS), Amazon.com (AMZN), Ford Motor Co. (F)
∗ This sector performs better when the economy is doing well.
What’s happening in the sector?
∗ XLY, which is an ETF that reflects the Consumer Discretionary Index dipped past its 200 Day Moving Average in April
∗ Consumer Staples is outperforming Consumer Discretionary by 1.26 points
∗ Consumer Discretionary is showing a negative yield of 0.78
Example of a Company∗ Walt Disney Co. (DIS) is the leading diversified
international family entertainment and media enterprise.∗ Disney manages five business segment:
1. Media Networks2. Parks & Resorts3. Studio Entertainment4. Consumer Products5. Interactive Media
How do you feel about this sector?
∗ Consumer Discretionary performed the worst out of the major sectors this year
∗ Outperformed S&P 500 in last 5 years
∗ Consumers may wait for positive economic growth when buying a car
Automobiles
∗ Demand for luxury goods is typically more resilient than due to the wealthier target demographic.
∗ Global economic growth benefits luxury goods due to growth of affluent consumers
Apparel Industry
∗ Advertising and home entertainment sales benefit from a growing economy.
Media
What will happen in the future?
Automotive industry:∗ Sales growth in emerging markets (BRIC and RoW)∗ Stagnant sales in established markets (US, Europe,
Japan and Korea)∗ Development of alternative technologies (hybrid and/or
electric vehicles)∗ Aligning production and supply bases in the regions
Media industry:∗ New technology - increased
accessibility∗ 2.7 out of 7.1 billion users∗ Revenue growth from digital
advertising and internet access
What will happen in the future?
Investment Strategies WALT DISNEY∗ Partnership with Dish Network, Apple∗ Frozen∗ Earning report; profit exceeds estimates
DIS
Net income increased from $1.01 a share ($1.85 billion) to $1.28 a share ($2.25 billion), while the estimate of 28 analysts was $1.16 a share
MICHAEL KORSTheir earning also beat the estimates one of the most heavily traded stocks
KORS
Mean-Reversion mode∗ short sell (high $60s & low $70s)
Referenceshttp://www.kottcapital.com/wp-content/uploads/2011/07/Consumer-Discretionary.pdfhttp://investing.covestor.com/2014/03/consumer-discretionary-stocks-canary-coal-minehttp://www.marketwatch.com/investing/stock/dis/profilehttp://thewaltdisneycompany.com/about-disney/company-overviewhttp://finance.yahoo.com/news/Beyond-XLY-Considering-etfdatabase-2252674992.htmlhttps://www.pwc.com/gx/en/global-entertainment-media-outlook/data-insights.jhtml
Questions?