Thesis’ Paterson: Three stocks to navigate global uncertainty
Ryan Paterson, research analyst at Thesis Asset Management, has highlighted three UK listed companies that could help navigate uncertainty caused by global events such as Brexit, the slowing global economy and the US election.
FTSE 100 cruising company Carnival is one such company that Paterson sees as taking advantage of the current global climate.
“Many investors worry about the cyclicality of Carnival, but the company continues to deliver record results in a soft period for the global economy. Its third quarter trading update was impressive and once again beat market expectations.
“The share price movement has been particularly choppy this year as investor sentiment has waned on fears of weak pricing, Zika virus, terrorism, Brexit and the effects of a slowing global economy on the industry.”
However, Paterson believes that the increase of demand from China for cruising is particularly reassuring for the firm. “We continue to see plenty of growth opportunity in Carnival, with China being a major catalyst. The incredible rise in Chinese tourism is only in its infancy and as the middle class grows, so too will tourism.
“The Chinese consumer is developing a real affinity for cruising and Carnival looks set to capitalise on these trends, with a growing presence in the region and its programme of building ships specifically tailored to its Chinese passengers.”
Paterson also highlights Segro, a Real Estate Investment Trust in the FTSE 250, as a business that has appeared to be largely unaffected by Brexit uncertainty.
“Segro has created a portfolio comprising modern warehousing, light industrial and higher value use assets (including data centres, retail assets and offices) which are well located with good sustainability credentials, and which will benefit from a low structural void rate and relatively low-intensity asset management requirements,” Paterson said.
“We continue to believe that Segro is strategically well positioned, with over 60% of its portfolio within Greater London, where increasing online delivery demands and limited supply is creating favourable pricing pressure.”
Croda, a niche player and leading producer of high-value chemical additives for the growing personal care industry, is also favoured by Thesis.
“Demand for the wide range of anti-ageing and cosmetic creams remains countercyclical, whilst the natural-based raw material inputs also provide a green alternative to many petrochemical-based products in the market,” Paterson said.
Croda had a successful re-entry to the FTSE 100 index in October and Paterson believes a number of positive catalysts make Croda an attractive play.
“The share price has been buoyed by investor optimism over increasing margins as well as upgrades due to weaker sterling. It remains the name behind the high performance ingredients and technologies in some of the biggest, most successful brands in the world.”