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UK consumer stocks: a surprising winner?

10/08/2023

What’s next for the UK economy? 

Inflation continues to surge, the Bank of England continues to raise the base rate, the cost of living is spiralling out of control. However, despite the UK’s economic woes, many experts are suggesting that UK consumer stocks could be a good buy. Here’s why. 

 

Naturally defensive

Many UK consumer stocks are naturally defensive: they’re businesses that sell goods and services that always have continous demand, even when times are hard. These include healthcare, utilities, household products, food and drink – even tobacco. 

According to the ONS, both the value and volume of retail sales rose in June 2023. Against all expectations, consumers are still spending. 

Improved consumer confidence and current economic indicators suggest that this spending could continue – but there are still risks. Retailers are still facing enormous cost pressures, while sales volumes continue to be constrained by high levels of inflation, which the Government is trying to battle. 

 

Which UK consumer stocks should I invest in?

Experts highlight a variety of UK consumer stocks that they believe are performing strongly. 

Some have pointed out that there will always be a need for supermarkets – and that even with a higher cost of living and consumers being squeezed by higher mortgage rates, supermarket spending continues to be high. Tesco, for example, has seen a surge in the sales of its premium ranges: sales are up by 14.9%, with the brand having added 100 new lines to its Finest range.

Others believe that the leisure and e-commerce sectors could offer opportunities. Ken Wotton of Gresham House highlights that many businesses in these sectors are currently trading on discounted valuations but continue to grow. In particular, he talks of Ten Entertainment Group seeing strong trading, Angling Direct with its loyal customer base and Moonpig with its high gross margins and “strong repeat revenue dynamic”. 

Despite current tough conditions, could certain UK consumer stocks still prove to be success stories? Potential leisure and e-commerce opportunities https://portfolio-adviser.com/is-there-life-in-uk-consumer-stocks

 

“Stable Rise Limited is not authorised or registered by the Financial Conduct Authority. The marketing materials are not intended to provide financial advice nor promote any individual financial products.”

 

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