Having examined the Consumer Staples sector in the Equity Leaders Weekly, we now look deeper into staples stocks by reviewing the SIA Consumer Staples Industry Report. Weāve highlighted both the top and bottom performers and found several compelling company charts that stand out in stark contrast to the other names in the report. These include Under Armour Inc., Gildan Activewear, Hims & Hers Health, and Hanesbrands, which sits at the top of this less-than-stellar list. Hanesbrands owns several clothing brands, including Hanes, Champion, Playtex, Bali, L'eggs, Just My Size, Barely There, Wonderbra, Maidenform, Berlei, and Bonds. It has a market cap of $2.62 billion and a price-to-earnings (P/E) ratio of approximately 13 times earnings. In the past month, shares of HBI have risen by 9.02%; over three months, they are up 46.23%, and theyāve gained 65.25% year-to-date. Currently ranked #1 in the SIA Consumer Staples Report, HBI has an SMAX score of 10 out of 10, underscoring its high relative strength not just against other names in the report but against all asset class alternatives. In the point-and-figure chart scaled at 2%, we can see that the stock has finally transitioned to a positive trend, which we have circled in black. This textbook reversal follows a significant decline from over $20 in 2021 down to $3.50. Shares are now on the rise, experiencing a breakout at the $6 level, which was a major resistance point (now solid support). Currently priced at $7.37, shares are nearing the next level of resistance at $7.75, clearly establishing HBI as a new leader in the consumer staples arena.
Now, letās contrast this leadership with E.L.F. Beauty Inc. (ELF), which is not enjoying the same success as HBI and has sunk to the bottom of the list. Letās dissect this trade, which has sent many investors into a tailspin as this once-popular stock fell from grace. In mid to late summer, shares of ELF began to underperform within the consumer sector, as indicated by the red highlighting in our analysis. This underperformance was detected by the SIA system during daily scans, putting SIA practitioners on alert. Shares have since experienced a sharp sell-off from the SIA Relative Strength sell signal at $180, currently trading at $107, marking a decline of 40%. There are no indications that the share price will stabilize here. ELF shares are at the bottom of an underperforming sector, technically making it the worst of the worst. Given the stock's price run-up since 2023, there is very little support down to a trend line at $40. Support levels are visible at $94, $83, $68, and $48, while resistance is strong at $121 and $134, with a significant cloud of resistance looming at $200āpotential exit points if relative strength continues to wane. ELF shares also carry an SMAX score of 0 out of a possible 10, further supporting the notion that the company is underperforming compared to nearly every other asset class, including simply holding cash. We wish the best for ELF shareholders, but the SIA system, which tends to take a forward-looking approach over a 6- to 18-month timeframe, continues to detect underperformance, signaling high risk for holding this stock against a backdrop of better alternatives. For those wondering how low such equities can go, consider the chart of Olaplex (OLPX), a now-favored stock of well-known investor Michael Burry of Scion Capital. In closing, while stocks can rise higher than we often anticipate, they can also decline much further than seems fundamentally sensible.
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