Consumer staples stocks have been one of the most unloved sectors of the equity market over the past three years or so. The share prices of many of the stocks that occupy this sector have gone nowhere, abandoned for large-cap high-tech growth companies. Value investors cut their teeth on buying the stocks great companies with durable competitive advantages when they trade at a depressed valuation. The challenge for the value investor is that one does not know when a turnaround will come. They just know that they must be patient and wait for the inevitable.
What is interesting about the best value plays is that the intrinsic value of the company continues to rise even and the share price goes nowhere. This makes the eventual rally ever more strong. We think we have found one such opportunity that should be in the portfolios of long-only stock investors and options traders alike.
