While mining stocks continue to battered by the oil price volatility and the “Big Four” UK supermarkets are being put under pressure by the discounters Aldi and Lidl, why not turn to “safer” consumer stocks like Associated British Foods (ABF) or sports retailer Sports Direct (SPD) – whose products consumers can’t get enough of.
Associated British Foods
Associated British Foods (LSE: ABF) hardly rolls off the tongue unlike some of its products — Ovaltine, Twinings, and Patak (Indian foods), it is also the owner of Primark. ABF might of “struck gold” with its fast-growing retail chain Primark – broker Citigroup recently upgraded the stock from “Neutral” to “Buy”. Last year, pre-tax profits from the fashion unit made up more than half of the group’s total in 2014.
Over the last 5 years, ABF’s shares have risen more than 250%. The Times’ Tempus Column believes ABF’s shares are a “Sell” are they are beginning to look quite expensive, and their are other income stocks out there yielding 4% to 5%. Other analysts believe in the short-term ie the next 4-6 weeks that the stock will rise further. With regards to ABF’s profits, since 2011 they have more than doubled to hit £662m last year.
When ABF reported its latest set of results in mid-Janaury, the group did warn of a “marginal” decline in full year earnings due to the strength of Sterling, profit reduction at its sugar business and a £128m write down from Chinese agricultural operations. So it is indeed a mixed bag for ABF but on the plus side for the company, its balance sheet remains solid.
Sports Direct International
With a rather controversial founder Mike Ashley, the UK’s biggest sports retailer, Sports Direct (LSE:SPD) goes from strength to strength. The group owns 465 stores with 408 in the UK and some of the rights to brands like Dunlop, Slazenger and Kangol.
Before Christmas, it said group revenues increased by 6.5% year-on-year to £1.4bn, but sales fell in its premium lifestyle and brands divisions. Sports retail sales increased to £1.23bn, helped by an 11.1% increase online to £176m.
Despite a few wobbles, jobs could be under threat at Sports Direct’s parent company – fashion retailer – USC -the majority of brokers seem to be indicating the stock as a “Buy”. Numis Securities set a new price target of 850p and reiterated its “Buy” status. The sports retailer has affordable goods on its side, and well-known brands which keeps consumers coming back for more.
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Sabuhi Gard has no position in any shares mentioned. The Motley Fool UK has recommended Associated British Foods and Sports Direct International. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.