Report by Sustainable Market Strategies

One of Sustainable Market Strategies’ high-conviction calls for the coming decade is the high likelihood of strong, sustained food inflation. To put it simply, absent a massive productivity surge, it is unlikely that farmers will be able to feed the population the low-cost, high-calorie diet they have become accustomed to, especially as climate change wreaks havoc with growing seasons and creates the conditions for ever more animal viral outbreaks. Policy changes are set to disrupt things further. Investors should seek to buy companies in the consumer staples sector who have the greatest chance of passing through inflation to their consumers. Avoid the worst offenders in the unhealthy snack business, including Mondelez and PepsiCo.

Report by 280First

By utilising AI, NLP, data analytics and qualitative analyst oversight, 280First can glean material and actionable insights on companies which will be missed by most institutional investors. Recent highlights include: 1) Lockheed Martin - changing expectations for future aircraft delivery; LMT’s 2023 10K no longer references its previously expected 156 per year delivery rate. 2) Adobe - brighter capital resources outlook. Acquisitions planned? 3) Alphabet - higher expectations for operating margin trend. 4) Comcast - concerns on multichannel video provider agreements. 5) Mondelez - losing shelf space due to disputes. Delay / unable to raise prices. 6) Sysco - dialling back growth expectations.

Report by Behind the Numbers

The current macro environment is bringing to the forefront the importance of the different impacts that the various inventory accounting methods have on company results during times of inflation. BTN have noticed several companies whose inventory levels have declined which may have shielded them from the full impact of rising costs. Meanwhile, their revenues have benefitted from aggressive price hikes. They believe this may be setting the stage for earnings disappointments in 1Q and 2Q 2022. Companies highlighted General Mills, The Coca-Cola Co, The Hershey Co, Post Holdings, Ball Corp, and Mondelez International.