Reply #8: Vice, necessity stocks pick up in housing slowdown [View All]

[UpInArms]

http://today.reuters.com/misc/PrinterFriendlyPopup.aspx?type=ousiv&storyID=2006-08-24T222104Z_01_N24428888_RTRIDST_0_BUSINESSPRO-ECONOMY-HOUSING-CONSUMER-DC.XML

NEW YORK (Reuters) - A fall in U.S. house prices would hurt spending across the board, but companies catering to Americans' necessities and vices would do better than others.

U.S. homeowners feeling poorer is bad news for the stocks of retailers and leisure companies, but consumers will always need to buy groceries, brush their teeth and feed their addictions, like cigarette smoking.

So companies selling consumer goods, food, health care, tobacco and alcohol are better placed to weather the impact of a slowing housing sector than others, analysts said.

"The interesting sectors are ... soaps, suds and cereal," said Don Gher of Bellevue, Washington-based Coldstream Capital Management. "Investors are looking for companies that will deliver even in an economic downturn. And typically those are companies that are aligned with selling the basic products or consumer staples."

The housing slowdown has been faster and steeper than expected. The market is flush with unsold homes, as real estate speculators try to unload properties they bought in hopes of a quick profit.

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