Wall of pessimism remains unbroken for discretionary goods

Regaining investor confidence remains a tall order for most consumer stocks. A wall of pessimism particularly remains for inessential goods.

Consumer discretionary names like Universal Robina Corporation (URC) and Wilcon Depot, Inc. (WLCON) have widely underperformed.

• URC: A confluence of internal and external headwinds has stacked against the company. including soaring prices of key commodities like coffee and cocoa, as well as a product portfolio that is less appealing to households prioritizing value for money.
• Wilcon: The anticipated recovery in home renovation did not pan out. A combination of bad weather delaying construction and households’ limited propensity to spend led to soft demand for the company’s offerings.

Meanwhile, consumer staples are outpacing discretionary names. Century Pacific Food, Inc. (CNPF) and Puregold Price Club, Inc. (PGOLD) have been standouts, as consumers downgrade and prefer nearby shops.

Century Pacific’s dominance in value-centric categories and Puregold’s deep penetration into local retail channels have resonated strongly with cost-conscious households.

Looking ahead, the mid-term elections in 2025 and continued monetary policy easing may buoy the sector. Whether these will translate to meaningful tailwinds remains to be seen.

The rating for the sector is neutral, with a preference for select staple stocks.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.) 

GERMAN DE LA PAZ III, CFA serves as an Equity Research Lead at Metrobank’s Trust Banking Group. His coverage includes gaming, telcos, conglomerates, and utilities, as well as select offshore markets. German holds a Bachelor’s degree in Humanities and a master’s degree in Industrial Economics from the University of Asia and the Pacific. Recently, he obtained his CFA charter and is currently pursuing additional industry certifications. In his free time, German enjoys playing sports, particularly basketball, and has a penchant for reading fiction books.
  

ARIZ MARCELINO is an Equity Research Analyst at Metrobank’s Trust Banking Group. Locally, he covers the banking, consumer, and property sectors. He also tracks offshore markets and global investment themes to support asset allocation strategies. Ariz graduated from New Era University with a degree in Banking and Finance and has passed the CFA Level 1 exam. Outside of work, he unwinds by watching popular sitcoms and anime series while enjoying a cup of hot matcha latte.