- Business models that should be resilient in an inflationary environment
- Strong client/customer relationships are especially important
2022 is proving to be a tough year for investors. The macro backdrop is incredibly uncertain, inflation is soaring and central banks are raising interest rates and pulling liquidity. A structural bear market seems to be underway.
“Companies with the strongest upwards revision and underperformance since the start of the year are best positioned to outperform on such a backdrop,” notes Evercore’s Julian Emanuel. Well one of our three is up 20 per cent, another is down 20 per cent and the third is 10 per cent lower in 2022. We’re focused on the strongest upwards earnings revisions over price momentum and these three are demonstrating they are not about to roll over, even if valuations are stretched.
Costco (US:COST) – an arch cost of living play, able to maintain and grow market share and margins even as inflation rises and recession looms. A likely rise in fees this year could be the catalyst for further momentum.
FactSet Research Systems (US:FDS) – the go-to for US earnings estimates and a broad range of market intelligence, which it supplies to various institutional clients. A growing cloud business and more varied product mix means it’s able to drive increased retention and expansion rates among existing clients, while also notching up new business wins.
W.J. Berkley (US:WRB) – an insurance business that is showing strong earnings growth and price momentum. Premium growth is good and growing investment earnings could be one to watch as interest rates rise.
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