Making the sense of the rotation from growth to value
The intense style rotation from ‘Growth’ to ‘Value’ that we witnessed in January 2022 was ferocious,...
With just a few days until Christmas and a growing feeling of panic about what to buy the in-laws, we thought it would be fun to ask seven Elite Rated managers what Christmas-related stocks they have in their portfolios:
Jewellery: Alastair Mundy, Investec UK Special Situations
Signet Jewellers Ltd: This is the biggest mid-market jeweller in the US, which also owns H. Samuel. It has struggled in recent times as fewer people are shopping in malls and investors worry that the company lends to customers, which could lead to bad debt. However, jewellery purchases are one of the few things that work better face-to-face than on the internet, so Alastair feels that the worries are overdone. There has been no significant deterioration in the company’s loan book and economies of scale give the company buying power.
Spirits: Mark Nichols, Threadneedle European Select
Pernod Ricard: This company has a number of brands which are favoured at this time of the year, such as those which produce single and blended whiskies, cognacs and wines. It is a good brand manager – both on a global and regional scale. The management team has an owner-operated mentality, with Alex Ricard currently at the helm (his grandfather was the founder). While he doesn’t own the company outright, the family still has shares.
Socks: Mark Sherlock, Hermes US SMID Equity
Gildan: This company is a manufacturer and supplier of branded clothing including Gold Toe Brands (more than 140 million pairs of socks are produced annually), Under Armour and New Balance brand socks. The company is particularly strong in environmental, social and governance issues and, as a result, has a very good reputation in the supply chain. It helps educate employees, recycles hot water and steam to reduce emissions and keeps costs low – which in turn makes it very competitive. Its products are manufactured in a sustainable and positive way.
Hair and beauty: Torcail Stewart, Baillie Gifford Corporate Bond
Sally Beauty Supply LLC: This company supplies professional salon products for hair, nails and skin, plus the latest in beauty accessories to both retail customers and professional hairdressers. It’s a US company with 2,000 stores nationwide and a growing international presence. At this time of year especially, their products are in high demand. As and when markets have experienced a correction, Torcail has been buying bonds he likes at cheaper prices, such as the high-yield Sally Beauty bond.
New Year’s resolution: Richard Penny, L&G UK Special Situations
Gym Group: This company has a very low-cost business model, coupled with good growth and good cash generation. It was founded by John Treharne, a former England squash player, in 2008, with the first gym in Hounslow. Outlets in Guildford and Vauxhall followed quickly and there are now gyms in more than 100 locations across the UK. Customers enjoy the benefits of pay-as-you-go membership (no contract) for just £10.99 a month and the gyms are open 24/7.
Last minute shopping: James Thomson, Rathbone Global Opportunities
Amazon Inc: When it comes to online shopping Amazon dominates in both the US and the UK. James thinks that, contrary to popular belief, the company is actually depressing earnings, as they are investing so much to keep growing. More than 50% of online sales over Black Friday weekend were via Amazon, with the e-commerce giant attracting a total of 12.78 million transactions over the two-day period of Thanksgiving and Black Friday – equating to more than 50% of total online sales. Last-minute purchases in the run-up to Christmas should be just as successful for the company, which is now also going into the food delivery space with Amazon Fresh.
Christmas shopping and New Year sales: Ainslie McLennan, Henderson UK Property
Robin Shopping Park: Ainslie believes that warehouse parks are far more attractive than the high street for shoppers. It is possible to attract a huge choice of tenants, so you can really create the right ‘mix’ of outlets to make dwell-times longer. Robin Shopping Park on the outskirts of Wigan is an example. Existing occupiers include Argos, Costa Coffee, Clintons, Matalan, Boots, Poundworld, Sports Direct, Smyths Toys, Pets at Home, TK Maxx, Burger King and Subway.