Invesco Dorsey Wright Consumer Staples Momentum ETF

PSL

Market cap $96M

The household products, beverage, and food industries are significantly undervalued versus 11-year averages, while tobacco is overvalued and low quality. Invesco Dorsey Wright Consumer Staples Momentum ETF has outperformed XLP in recent years, but PSL carries higher risk and slightly lower risk-adjusted returns since inception, making it a debatable long-term choice. Three stocks cheaper than their peers in June.

Consumer spending has been a strong point in the economy, but recent headwinds are building. The consumer discretionary sector has felt pressure due to recessionary concerns on top of pricing inflation from potential tariffs.

As reports that inflation heated up in January 2025 emerged on February 12, the market shuddered, with the Dow dropping by more than 300 points in morning trading. The recent Consumer Price Index report may be enough to prompt investors to take a cautious stance, particularly as the impact of recent aluminum and steel tariffs has yet to be seen and the threat of tariffs on Mexican and Canadian goods remains in play.

If the promised Trump tariffs take effect soon, inflation could go up and leave a dent on consumers' buying power.

PSL currently holds 42 U.S. Consumer Staples stocks selected for their strong intermediate and long-term price movements. Its 0.60% expense ratio is high, as is its 0.10% median bid-ask spread. Another downside is PSL's low $92 million in assets under management. However, even though many have ignored this fund, PSL outperformed XLP since its Index changed in February 2014. While momentum is the focus, PSL also has exceptional earnings momentum, evidenced by its constituents' 11.03% last quarter earnings surprise figure and 6.82/10 EPS Revision Score.

For investors seeking momentum, Invesco Dorsey Wright Consumer Staples Momentum ETF PSL is probably on the radar. The fund just hit a 52-week high and is up 26.2% from its 52-week low price of $81.26/share.

To date, 145 of the 199 companies in our Retail/Restaurant Index have reported their EPS results for Q2 2024, representing 73% of the index. The blended revenue growth estimate for the 199 companies in this index is 3.5% for Q2 2024. Home Depot reported better-than-expected Q2 earnings and revenue.

While consumer prices may have gone up in December, wholesale prices fell, much to the surprise of many economists. And this decline in wholesale prices should impact spending on consumer staples.