Consumer Confidence Down: Short-Sellers Get Ready for Fat Profits

Every week, Bloomberg reports its "Consumer Comfort" index, a gauge of Americans' perceptions on the economy, personal finances, and "whether it's a good time to buy needed goods or services." "The comfort index can range from 100, indicating every participant in the survey had a positive response to all three components, to minus 100, signaling all views were negative."

The most recent data put the index at minus 47.6 for the last week of July, the lowest figure since May. Consumers were understandably unnerved by the approaching debt ceiling, due August 2, and sluggish economic and labor conditions, John Herrmann of State Street Global Markets LLC told Bloomberg.

Moreover, market participants witnessed "the biggest one-week drop in the Standard & Poor's 500 Index in a year," writes Jillian Berman of Bloomberg.

"The Bloomberg Consumer Comfort Index has been minus 40 or less, a region typically associated with recessions and their aftermath, for 170 of the past 172 weeks," Berman adds.

Consumers drive the majority of the American economy -- consumer spending, or consumption, constitutes over 70 percent of GDP. Souring sentiment among already-downtrodden consumers could impede economic recovery.

In particular, declining consumer confidence in the US, the biggest consumer market in the world, could hurt many domestic and global consumer goods retailers.

So, which consumer stocks appear vulnerable? For ideas, we collected short-seller data, and identified a list of consumer goods stocks that have seen a sharp increase in shares shorted over the last month.

Short-sellers seem to think the weakening consumer sentiment will drag down these companies -- do you agree?

List sorted by increase in shares shorted as a percentage of the share float. (Click here to access free, interactive tools to analyze these ideas.)

1. Lululemon Athletica (Nasdaq: LULU  ) : Apparel Clothing industry with a market cap of $3.98B. Shares shorted have increased from 6.66M shares to 13.70M month-over-month, a change representing 8.71% of the company's 80.79M share float.

2. Goodyear Tire & Rubber (NYSE: GT  ) : Rubber & Plastics industry with a market cap of $3.43B. Shares shorted have increased from 12.01M shares to 16.88M month-over-month, a change representing 2.13% of the company's 228.19M share float.

3. Tesla Motors (Nasdaq: TSLA  ) : Major Auto Manufacturers industry with a market cap of $2.55B. Shares shorted have increased from 17.67M shares to 18.21M month-over-month, a change representing 1.16% of the company's 46.47M share float.

4. Temple-Inland (NYSE: TIN  ) : Paper & Paper Products industry with a market cap of $2.83B. Shares shorted have increased from 4.26M shares to 5.35M month-over-month, a change representing 1.07% of the company's 101.67M share float.

5. Campbell Soup (NYSE: CPB  ) : Processed & Packaged Goods industry with a market cap of $10.26B. Shares shorted have increased from 17.18M shares to 18.82M month-over-month, a change representing 1.05% of the company's 156.28M share float.

6. Hormel Foods (NYSE: HRL  ) : Meat Products industry with a market cap of $7.28B. Shares shorted have increased from 8.48M shares to 9.79M month-over-month, a change representing 0.95% of the company's 137.76M share float.

7. Crown Holdings (NYSE: CCK  ) : Packaging & Containers industry with a market cap of $5.6B. Shares shorted have increased from 3.11M shares to 3.98M month-over-month, a change representing 0.60% of the company's 145.46M share float.

8. Dr Pepper Snapple Group (NYSE: DPS  ) : Soft Drinks industry with a market cap of $7.94B. Shares shorted have increased from 8.93M shares to 10.22M month-over-month, a change representing 0.60% of the company's 216.57M share float.

9. Domtar (NYSE: UFS  ) : Paper & Paper Products industry with a market cap of $2.99B. Shares shorted have increased from 1.77M shares to 2.01M month-over-month, a change representing 0.59% of the company's 40.36M share float.

10. ConAgra Foods (NYSE: CAG  ) : Processed & Packaged Goods industry with a market cap of $9.91B. Shares shorted have increased from 7.14M shares to 9.47M month-over-month, a change representing 0.57% of the company's 409.29M share float.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


Kapitall's Andrew Dominguz does not own any of the shares mentioned above. Data sourced from Finviz and Yahoo! Finance.

The Motley Fool owns shares of Lululemon Athletica. Motley Fool newsletter services have recommended buying shares of Lululemon Athletica. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 11, 2011, at 3:08 AM, rodessa wrote:

    I was hesitating about shorting LULU, I don't know why, as with a P.E.R of more than 60, compared to a P.E.R. of less than 18 for a very good runner as NIKE, I'm now going to short LULU that should come back to less than $ 20.00, mean 60.00% to win as the quote of LULU is of 51.33 as of august 10 !!!.

    What happened to TRAVELZOO should happen soon to LULU, as the problems of Under Armour can happen some day to LULU.TRAVELZOO has a more secured business.

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