The S&P consumer staples index racked up more than 25 percent in gains since the March low. Nik Modi, senior analyst and executive director at UBS, shares his outlook and sector stock picks.
“We are still bullish on the sector,” Modi told CNBC. “These stocks have clearly lagged since the March lows, they’re still outperforming from when we had the Lehman crisis and we still see upside for the second half of the year.” (See his stock recommendations, below.)
Emerging markets are holding in strong for companies such as Colgate-Palmolive, said Modi.
“You had a lot of destocking occurring in the fourth quarter so you should see some easy comparisons as a result,” he said.
Additionally, Modi said he has been bullish on the tobacco sector since the beginning of the year.
“You have companies yielding anywhere between 5 to 8 percent on the dividend side and tobacco is one of the only sectors that haven’t cut their dividends in the last 12 months,” he said. “You’re still getting that yield, you’re still getting good earnings growth because this sector has pricing power.”
Proctor & Gamble
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Modi has investment banking clients who own shares of P&G. Also, UBS has received compensation from P&G within the past 12 months.
Modi does not personally own shares from any of the other companies mentioned above.