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Consumer staples ETF may gain 20-30 per cent: National Bank

A customer enters a Shoppers Drug Mart in Toronto on Feb. 7, 2011.

Deborah Baic/Deborah Baic/The Globe and Mail

Investors in Canadian ETFs may be more comfortable betting on resource or energy sectors, but National Bank Financial says there may be an opportunity to make gains thanks to strong spending by Canadian consumers.

NBF issued a research note suggesting a potential bull trend in the Consumer Staples Index with "potential for 20-30 per cent upside long term."

Food retail, drug retail and packaged foods and meats are the major sub-sectors tracked by iShares S&P/TSX Capped Consumer Staples ETF (XST). The holdings are weighted toward such retailers as Shoppers Drug Mart, Alimentation Couche-Tard, Loblaw Cos. and Metro Inc. (with positions in such food staples firms as Saputo Inc., Viterra Inc. and George Weston Ltd.)

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"XST is valued slightly higher across all metrics of earnings, book and cash flow," says the NBF note. "This is consistent with the sector's recent level of relative outperformance, which we expect to continue."

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