Corporate
America feels the change as consumers alter their buying habits since the
economic slowdown caused by the mortgage crisis and resulting credit crunch
last year has not been such bad news for everyone, reflecting both behavioural
shifts among US consumers and the advantages enjoyed by those companies that
are less dependent on the US domestic market than most of their competitors.
Wal-Mart,
the largest retailer in the US, has a mass discount business that is focused on
low-income consumers, who have been the hardest hit by rising energy prices and
tightening credit. It’s shares have risen by 23% since last October, when the
credit crunch started picking up pace, to hit their highest level for 4 years.
And this is
typical for these kind of companies when the economy is not doing too well
anymore. I wrote about this several times to my subscribers already and why
this is so. In bad times no one is going to stop eating and drinking just because
the economy is in a recession. So what do you have to do? Go shopping of
course. The same goes for the healthcare sector. If people need medication and
pharmaceuticals, they won’t stop buying them either just because of an economic
pull-back. But most of us will definitely have second thoughts on buying a new
car or tv etc, when times are bad and not everyone can afford carrying a fat
wallet around with them!
People just
don’t have as much access to cash in economic turmoils as they are used to and
that clearly has an impact on how people behave in these times!
Wal-Mart
has also confirmed that it was benefiting from more traffic at the hundreds of
stores across the country. The retailer also noted that customers overall are
using cash, rather than credit cards.
Same with
Procter & Gamble. The worlds largest consumer products company reported
that sales of it’s leading brands such as Pampers and Tide are still going
strong. So when markets are in a
down-spin, it doesn’t automatically mean that every company is affected. On the
contrary. Some even benefit.
Another
bright spot on the corporate American landscape are those companies with large
export markets, which are helped by the weak dollar, and those exposed by
booming sectors, such as energy and mining, and energy markets.
Other
companies that have reported strong first-quarter profits are Apple, Goodyear
(boosted by the weak dollar) and Caterpillar (the worlds biggest maker of
bulldozers), Boeing and Honeywell that were buoyed by strong overseas demand.
So not everything
is bad on the US economic front! And if things carry on as above and we don’t
see another credit crunch or similar situation, we should sail out of the
current market slowdown, or if you like, recession, pretty smoothly.
Yours in
Successful Trading,
Ricky
Schmidt
www.stockbreakthroughs.com
www.stockbreakthroughs.com/blog