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Investing Specialists

Ultimate Stock-Pickers' Top 10 Consumer Goods Stocks

Our top managers continue to build up positions in key consumer names.

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By Vishnu Lekraj | Stock Analyst

Even with the dramatic runup in the equity markets since the beginning of March, our Ultimate Stock-Pickers continue to either add to or build up stakes in consumer goods stocks, which had been viewed by many as convenient places to hide during the bear market. As you may recall, we had been convinced that the flood of transactions that occurred during the fourth quarter of 2008 and the first quarter of this year were far from reflective of the long-term focus generally adhered to by our top managers. Concerns about continued declines in the equity markets and heavier-than-normal redemptions by mutual fund investors were pressuring some managers into purchases and sales that not only ran contrary to the activity we had seen from them in the past, but actually flew in the face of our own analysts' views. We believe that what we are seeing now is a much more normal pattern of buying and selling activity, based more on the fundamentals of the businesses behind the stocks being bought and sold.

While the consumer goods sector, which is a distinct Morningstar sector designation, includes everything from auto manufacturers to consumer electronics firms and clothing manufacturers, most investors tend to connect it with more traditional consumer staples industries, such as beverages and household and personal products. With most of the firms in these industries providing basic, everyday goods to consumers and relying on strong brands and relentless marketing to sell their products, it is not surprising that their corporate images (as well as their stocks) are oftentimes identified with the products they sell. Mention  Coca-Cola (KO) and people think of bubbly soft drinks. Talk about  Hershey (HSY) and investors think not only about the stock, but of the chocolate bars the firm sells in abundance.

The Morningstar Ultimate Stock-Pickers Team does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.