We’ve seen many times in the past how structural shifts in consumer spending have a major effect on economies. Consumer spending accounts for 50%-60% of GDP, depending on the country, underlining the importance of the choices that consumers make about how they shop, bank, communicate, work, live and play.
We are seeing the latest shift unfold as consumers increasingly demand cleaner products that shun harmful ingredients, additives and chemicals in those products they put in and on their bodies, in their homes and workplaces, or into the environment. Fuelling this shift are growing concerns over obesity, diabetes, added sugar, genetically modified organisms (GMOs) and artificial ingredients in food, personal care items, and other products, and rising awareness about our collective environmental footprint.
Tematica Research’s Cleaner Living index, which is used by the Cleaner Living ESG-S ETF, captures this unfolding change in consumers’ preferences across multiple segments of the economy.
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Greener eating with Sprouts
While US retailers such as Walmart, Kroger and Target are converting shelf space to offer cleaner living products, over 68% of the products at Sprouts Farmers Market (Nasdaq: SFM) are already driven by attributes such as organic, non-GMO, paleo and keto. Over the last few years, its e-commerce penetration has more than quadrupled. Sprouts opened 12 new stores in 2021 and targets 15-20 new ones in 2022. Those efforts, along with consumer market-share gains, have Sprouts on track to deliver earnings per share (EPS) of $2.08 this year, growing to $2.30 in 2023 versus $1.25 in 2019.
Keeping electric vehicles running
The global electric vehicle (EV) market is expected to reach 34.8 million units by 2030, up from just 4.1 million in 2021. We see a growing demand for EV charging stations, both out and about as well as in the home. The monthly data from carmakers shows that the mix of EVs is growing. As that continues, the EV charging station pain-point will become increasingly clear.
In the US, there will be a spending boost for EV charging stations associated with the Biden administration’s infrastructure spending package, while Europe is aiming to become less dependent on Russian oil and gas. All of that bodes very well for ChargePoint Holdings (NYSE: CHPT), which has the largest network of charging stations across 14 countries in North America and Europe.
Making sure scrap metal isn’t wasted
Steel prices have risen considerably as a result of supply disruption caused by the Russia-Ukraine war. As the Omicron lockdowns in China fade and US infrastructure spending rises, demand for steel should climb. That could keep steel prices at or near current levels, which is positive for Schnitzer Steel Industries (Nasdaq: SCHN).
Schnitzer is a global leader in the metals recycling industry that collects, processes and recycles raw scrap metal and provides processed scrap metal to mills and foundries around the world. Roughly 95% of the company’s revenue is derived from the sale of recycled ferrous and non-ferrous metal products and finished steel products. Analysts’ consensus expectations are forecasting that Schnitzer will deliver EPS in the range of $7.58-$7.73 in 2022 and 2023, compared with $2.16 in 2019.
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