Should you go defensive or back a bounce for beaten-up consumer stocks? Experts’ share picks to shuffle your portfolio and survive a harsh winter

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A real back-to-school and back-to-business feeling was in the air last week – until we learned of the Queen’s sad death. While parents were photographing uniformed offspring at their front doors, the press was photographing the most famous front door in the country as Liz Truss replaced Boris Johnson in 10th place.

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Economists are currently evaluating how well the country will weather the drop in temperatures, while many investment experts are preparing their portfolios for the change.

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The new prime minister’s plans to freeze energy prices have been widely lauded, but they are costly and some fear may not be enough.

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Tough talk: New prime minister’s plans to freeze energy prices have been widely welcomed, but they are expensive and some fear may not be enough

Even with the “big bazooka” initiative to tackle skyrocketing energy prices, the economy will still face real challenges over the next few months. Jason Hollands, director of property management company Evelyn Partners, says it’s going to be tough times for many households.

He says: “There is still the possibility of a recession, albeit less severe as a result of the energy package announced on Thursday. From now on, interest rates will continue to rise, although perhaps not to the 4.5% level that some have suggested and that the stock market has begun to take into account.”

With uncertainty in the air and likely new government announcements, investors are wondering how to position their portfolios for a bumpy and cold few months.

State of the country’s finances

The Downing Street position may have changed, but most of the issues affecting the economy have remained the same. Energy costs remain high, as does inflation, while the pound has fallen to a 37-year low against a rising dollar.

Russ Mould, investment director at investment platform AJ Bell, says we should be looking at the performance of the pound and equities rather than the short-term vagaries of the stock market when evaluating the economic outlook.

He says: “Financial markets express their faith—or lack thereof—in a country and its economic and political prospects through how much they borrow from it and how they value its currency. In each case, traders and investors are already making it clear that they don’t like what they see – the pound’s fall and stock yields rise.”

He says “the odds are stacked against” Trass when it comes to changing that, with the government juggling “40 years of high inflation, the threat of a recession, an energy crisis, the war in Ukraine, a weak pound, rising interest rates and the government’s own state of poverty.” .

…and the state of our own investments

With the outlook so difficult, investors may wonder why they should stay in investing at all. Of course, the dynamics of the stock market over the past few months does not inspire optimism. “Even the eternal investment optimist may find it difficult to stay afloat right now,” admits Dmitry Lipsky, head of fund research at the Interactive Investor platform.

The FTSE100 index is down nearly four percent this year, and those who enter the current volatile environment with a portfolio of growth stocks – in tech and other high-octane industries – will be badly burned.

Darius McDermott is the Managing Director of Chelsea Financial Services, an investment fund firm. He says that in the current environment, “there is no easy answer” to where investors should invest their money. “Very much is determined by the outcome of the war in Ukraine,” he adds.

Be careful when choosing stocks

Despite the difficulties, McDermott says “there are still ways to generate positive returns during this period of uncertainty.”

Picking the right stocks can help ensure your investment portfolio weathers a tough winter, with most experts suggesting a defensive approach until Truss takes over. Hollands says: “In an environment of high inflation and stalled economic growth, markets tend to favor companies with strong balance sheets that are less sensitive to the overall economic environment,” says Hollands. “These include essential goods—businesses that provide everyday goods that people cannot live without; health stocks; and those with multi-year order books, such as defense companies whose clients are governments.”

In particular, he likes Unilever’s consumer products business, AstraZeneca’s pharmaceutical group, and BAE Systems, a defense company.

McDermott agrees. He says consumer goods companies “often tend to provide bear market hedges” because no matter how the overall economy fares, “families will continue to buy essentials like food and toiletries. accessories”.

He also likes Unilever for its “healthy cash flow, high margins and ever-increasing earnings.” Unilever’s shares are down 0.7% this year and are undervalued by many of their peers.

Rob Bergeman, Brewin Dolphin’s asset management manager, is hopeful that things will pick up on Main Street after the track’s energy package. He adds: “Any tax cut in the near future could lead people to buy more clothes, especially to dress in the colder months and keep the heat off.” He prefers stocks of Marks & Spencer and Next.

Burgeman also hopes Truss will focus on spending on infrastructure – large capital projects like roads and railroads – to boost the economy. If so, builders and construction groups such as CRH and Balfour Beatty could be among the main beneficiaries.

He also adds that those who believe a winter of discontent is ahead can find solace in buying companies such as insolvency specialists Begbies Traynor and FRP Advisory. They will pick up the pieces if the business fails. Bus operator National Express should win if rail…

Credit: www.dailymail.co.uk /

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