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Quarter-End Insights

Economic Moats Critical for Consumer Defensive Stocks

As the consumer picture darkens again, economic moats are more important than ever.

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  • Commodity cost inflation looks set to moderate as the global economy appears to be slowing once again. We expect the food CPI to peak in July or August.
  • The same drivers that are causing a pullback in commodities markets are likely to mean that consumer spending will remain strained for the remainder of 2011.
  • Given the continued challenging environment, we believe that economic moats are more important than ever. We recommend investors stick to the best-in-class names that have the most pricing power in their categories.

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Philip Gorham does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.