With sky-high inflation, consumer stocks have been hammered.
Consumer prices soared 9.1% in June, year over year – its fastest pace since 1981, and well above expectations for 8.8%. Worse, the producer price index was up 11.3% in June—prices which will eventually be passed on to consumers.
According to Barron’s, “It has been a tough year for consumer stocks. The Consumer Discretionary Select Sector SPDR Fund (XLY) has lost well over 30% of its value in 2022, while the SPDR S&P Retail ETF (XRT) has tumbled by more than a third at a time when the S&P 500 has slipped just over 20%. The Consumer Staples Select Sector SPDR Fund (XLP), long seen as a safe haven in times of turmoil with steadier earnings, has held up better than the market but is still off more than 5% since the start of the year.”
However, despite the carnage, insiders are buying.
Tony Milikin, Keurig Dr Pepper’s chief supply-chain officer, paid $1.4 million for a total of 38,937 shares, at an average price of $35.96 each. Maurice Milikin also bought 12,979 shares at $36.17 per share on July 11, for about $469,450.
Bed Bath & Beyond interim CEO Sue Gove bought 50,000 shares for $230,500. Independent Chair Harriet Edelman bought 10,000 shares for $49,400. Director Jeffrey Kirwan bought 10,000 shares for $49,000, as well.
Nike Director John Rogers bought 10,000 NKE shares for $1 million on June 30.
Best Buy Founder Richard Schulze bought 250,000 shares of BBY for just under $20 million. As noted by Barron’s, Schulze’s family office said he purchased more shares “due to the market’s overreaction to consumer stocks in the recent market selloff. Best Buy’s P/E trading range created a value opportunity that couldn’t be ignored.”
And in May, Starbucks CEO Howard Schultz bought $10 million worth of stock.
With many consumer stocks down, investors may want to follow insider leads.