The Staples of Life
In this investment article we are going to look at another sector to invest in.
The sector is Consumer Staples. Consumer Staples represent things we consume like groceries, beverages, household products and personal products.
And things everybody seem to use. From Campbell Soup to Estee Lauder to Hershey, you will see many recognizable names in the Consumer Staples sector.
Consumer Staples is one of the smaller sectors based on market capitalization. It is number 7 out of 11.
It is small but mighty for investors.
The reason Consumer Staples is interesting to investors is that it is a sector that performs in both up and down economic cycles. There isn’t “drama” in the sector.
Unlike the technology sectors, Consumer Staples tends to be stable.
One of the characteristics of the Consumer Staples sector is that consumers don’t spend much time comparison shopping.
You may like a specific brand , but there is likely a comparable product that will be about the same price.
Since we are talking about the Consumer Staples sector I asked myself , “ if I shop in a Staples store and buy staples, are staples considered a staple?”
How often do you reach for the stapler?
Pre – COVID, how often did your stapler go missing from your desk?
It doesn’t matter what brand of staples you buy or where you buy them or how much they cost as long as they fit into your stapler and you can start stapling away.
Do you ever compare the price of a box of staples?
A box of 1000 standard staples costs about $4.00-$5.00.
Stores that sell staples, like Staples are included in the Consumer Staples sector.
No, not because the name of the store is Staples.
There are all kinds of staples. Staples used in surgery. Heavy duty staple guns (with staples) used in construction or smaller lighter weight staplers to tack stuff up on walls, like posters. Or wallpaper.
Swingline staples are made in Long Island City, NY. Made in the USA!
Staples the store, where you can buy Swingline staples and other staple brands, is a privately held company. You cannot buy stock in Staples.
There are substitutes, like Arrow staples that work in a Swingline stapler.
Who owns Arrow staples?
The Arrow Fastener Company was sold to a Chinese manufacturer in 2017. [1]
You might prefer shopping at Office Depot. If so, you will be interested to know that earlier this year Staples tried to buy Office Depot.[2]
Office Depot rejected the offer, so you still have a choice in your staple purchases.
I tell you, there is a lot going on in the world of staples. Something to think about when you are choosing a sector to invest in.
Like air and water, we always need staples.
[1] Arrow Fastener Co., LLC to be Acquired by Hangzhou GreatStar Industrial Co., Ltd. (prnewswire.com)
Retail Trade in the US – Industry Data, Trends, Stats | IBISWorld
[2] “The company that owns Office Depot and OfficeMax disclosed Tuesday that it had rejected an unsolicited takeover offer from the company that owns Staples. But it said it’s open to an alternative deal, including combining their retail operations.
The ODP Corporation, the parent company of Office Depot, released a letter detailing its response to the offer by Sycamore Partners unit USR Parent, the private equity owner of Staples.
Staples has offered to buy ODP outright, but ODP said that offer is fraught with potential regulatory issues. A federal judge blocked a tie-up of Staples and Office Depot in 2016 after regulators objected.
“We are open to combining our retail and consumer-facing ecommerce operations with Staples under the right set of circumstances and on mutually acceptable terms,” ODP Chairman Joseph S. Vassalluzzo wrote in the letter.
Rivals to merge?:Staples proposes buying Office Depot for $2.1 billion
Office Depot rejects Staples acquisition bid but open to retail merger (usatoday.com)
ODP also suggested a potential joint venture as an alternative arrangement.
Staples had offered $40 per share for ODP, whose shares closed at $45.86 on Friday.
If Office Depot, OfficeMax and Staples become one company, it’s unclear whether there would be any store closures or name changes.
Staples did not immediately respond to a request seeking comment. Sycamore acquired Staples in 2017 and took the retailer private.”
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
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