In 2023, consumer staples stocks saw a collective decline of 6.5%, performing poorly compared to the broader market. This has sparked investor optimism for the sector in 2024, as historically, sectors that underperform one year tend to outperform the next. However, the presence of short interest adds a twist to the narrative, potentially keeping this sector subdued, particularly for some consumer staples stocks that are being targeted by short sellers.
Short interest, which refers to the percentage of a stock’s float being sold short, can provide clues about the potential direction of a stock. Stocks with high short interest may indicate a likelihood of downward movement in the near future, as investors borrow and sell shares in anticipation of a price drop.
Among the consumer staples stocks attracting short sellers’ attention are Hershey’s (HSY), Beyond Meat (BYND), and PepsiCo (PEP). Hershey’s stock has faced a 21% decline in the last 12 months due to rising cocoa prices impacting earnings. Short interest in HSY stock has increased by 31% in the last month, with institutional investors showing caution towards the stock.
Beyond Meat reported a full-year revenue decrease of 18% compared to the previous year, leading to concerns about its earnings outlook. The company faces stiff competition in the plant-based protein market, with short interest in BYND stock still at around 36%.
PepsiCo has encountered challenges due to the rise of obesity concerns affecting its future earnings. While the company beat bottom-line expectations in all quarters of 2024, a slight miss on the top line caused a dip in PEP stock. Short interest in PEP stock has risen by 6% in the last month, although the company’s consistent dividend payouts over the years make it an attractive option for investors.
Overall, the presence of short interest in these consumer staples stocks indicates caution among investors, with potential implications for future price movements. Investors should consider these factors when evaluating investment opportunities in the sector.