4th Mar 2022 17:25
(Alliance News) - Growth stocks serve has an effective hedge against inflation, analysts at Liberum said on Friday, outlining the likes of THG PLC, Ted Baker PLC and Made.com Group PLC as consumer stocks to buy into.
Growth stocks in the consumer discretionary sector have been hurt in recent, though Liberum sell-offs seen since September are now "well overdone".
"We expect the market to reappraise growth stocks as these provide the greatest protection against inflation," Liberum explained.
"There is a historic correlation that shows a rotation back into growth stocks as inflation peaks. We think this could happen in April/May."
Liberum believes that the market will soon consider growth as the best way to protect against inflation.
The broker has a preference for companies with pricing power, something that could come through a wide product offering, sector dominance or strong distribution channels.
Liberum eight London listings which are achieving "the highest growth rates". Some of these also have margin upsides or weak valuations.
These firms include sofa seller Made.com, Hut Group operator THG, Sports Direct owner Frasers Group PLC and pet products retailer Pets At Home Group PLC.
Eggless cake maker Cake Box Holdings PLC and chocolatier Hotel Chocolat Group PLC could also offer sweet share price gains, Liberum added.
Sports nutrition firm Science in Sport PLC can also make healthy progress, while shares in womenswear firm In The Style Group PLC should also be in fashion, the broker added.
Away from London, Liberum placed online retailer Zalando SE in the same boat as the other eight stocks.
Other stocks, meanwhile, have latent revenue progress and have a "gross margin recovery in
play", the broker added.
The stocks it put in that category are retailer Superdry PLC and Ted Baker.
Finally, Liberum drew attention to Card Factory PLC, a deeper recovery play, and Wickes Group PLC, one of the markets "best kept secrets".
By Eric Cunha; [email protected]
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