The Prudent Investor


Defending Against Volitility – Part 2
April 3, 2007, 7:10 am
Filed under: Consumer Goods

Since the beginning of 2006 there have been four other days where the DOW lost more than 1.5%, so perhaps it would be helpful to see what happened to the companies under consideration on those days.

  1/20/2006 5/17/2006  
DOW $10,880.71 $10,667.39 -2.0% $11,410.13 $11,205.61 -1.8%  
CPO $24.85 $24.65 -0.8% $26.57 $26.18 -1.5%  
MKC $30.70 $30.49 -0.7% $35.19 $34.84 -1.0%  
UN $69.14 $68.55 -0.9% $67.72 $66.75 -1.4%  
PEP $58.28 $57.28 -1.7% $59.22 $59.65 0.7%  
CAG $20.80 $20.72 -0.4% $22.52 $22.45 -0.3%  
SJM $44.90 $44.35 -1.2% $40.82 $40.55 -0.7%  
FLO $26.99 $26.60 -1.4% $28.00 $27.82 -0.6%  
  6/5/2006 5/30/2006  
DOW $11,247.55 $11,048.72 -1.8% $11,277.25 $11,094.43 -1.6% -12.3%
CPO $26.28 $25.40 -3.3% $27.70 $26.41 -4.7% -13.1%
MKC $34.09 $33.77 -0.9% $35.05 $34.70 -1.0% -8.4%
UN $22.64 $22.41 -1.0% $22.86 $22.57 -1.3% -7.3%
PEP $60.37 $59.75 -1.0% $60.21 $60.42 0.3% -6.3%
CAG $22.61 $22.70 0.4% $22.62 $22.47 -0.7% -4.4%
SJM $41.52 $41.20 -0.8% $40.60 $40.69 0.2% -4.1%
FLO $29.66 $29.40 -0.9% $28.38 $29.03 2.3% -3.3%

Well, that was unexpected. I actually did anticipate seeing all companies doing better than the DOW when adding these down days together, but Corn Products actually did worse. This is a case where looking more in depth into the numbers is warranted before tossing the company.

CPO - One Year Chart

An examination of the chart shows that a decline started in the latter part of April 2006, so the Market drop apparently enhanced its decline. This was about the time when CPO filed their Quarterly Report, so it is reasonable to hypothesize that analysts did not like what they saw at the time.

CPO - Two Year Chart

Looking at a two year chart, one can see that CPO had gone from $20 to $30 within six months, so it is understandable that investors may have wanted to protect profits.

I am going to hold onto all companies in the group as I move towards the consideration of an addition to the portfolio.

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