3 Ways to Profit from Consolidation in the Consumer Goods Industry

With the consumer class expanding around the world, there has been a great deal of corporate activity in the companies that cater to this sector. Coca-Cola KO is spending billions on acquisitions just to expand its presence in China. There are three ways for investors to profit from corporate transactions in the consumer sector.

Exchange traded funds offer a broad approach to the sector.

The SPDR Consumer Discretionary Select Sector ETF XLY and the Vanguard Consumer Discretionary ETF VCR are the two largest. Both have done well over the last year, testament to the demand for consumer sector securities. For that period, Vanguard Consumer Discretionary ETF is up more than 24 percent. Over that time segment, SPDR Consumer Discretionary Select Sector ETF has risen more than 22 percent.

Both top the Dow Jones Industrial Average DIA average increase of under 16 percent.

Blue chips stocks in the sector offer an attractive way to gain. Coca-Cola and PepsiCo PEP are on the prowl due to the declining sales in soda. Unilever UL is a British consumer goods giant with a solid global presence that has a strong record in buying labels such as Ben & Jerry's Ice Cream.  Companies like Coca-Cola, PepsiCo, and Unilever will be the ones to provide solid dividend income in the consumer sector, too.

Buying into the targets is an even better way to profit.

There has been much speculation that Apple AAPL will go after Netflix NFLX due to its brand in the consumer market. The food sector has many tempting small caps such as The Original SoupMan SOUP and Tootsie Roll TR. If you want to profit from the voracious appetite of Chinese and Indian consumers for gold, a small cap exploration firm with prime holdings in North America like Premium Exploration PMMEF is alluring. With soda sales falling for Coca-Cola and Pepsi-Cola, High Performance Beverages TBEV, an energy drink, will become more attractive, as laid out in a previous article in Benzinga along with four other small cap beverage companies.  As a note to investors, small caps will not be included in the larger ETFs so check the holdings.

Consolidation in the consumer goods sector will continue, to be sure.

There are three main ways to prosper. But there are many stocks to consider, as the consumer sector is so large.