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Seeking resilience in tough times

Former City analyst Robin Hardy assesses the resilience of three companies as we head into uncertain waters
Seeking resilience in tough times

This week we look at resilience – how well set a business or market is to fend off or limit the impact of consumer spending pressure or even a full blown recession.

Some companies are naturally resilient because of the necessity or indispensable nature of their product, others benefit from shifting market undertows that offset macro changes while others simply work exceptionally hard to make their products more popular, even elevating them to classic or cult status. Necessity offers the best defence, perhaps even assuring growth regardless of the economic climate, shifting trends ultimately run their course but give near-term protection and while sweating a fashion brand can keep up momentum, trends can change on a sixpence. Three somewhat different dynamics here but it does feel that low, staid and steady will win the race, long-term.

Britvic (BVIC) – a leading brand owner and big name distributor in the soft drinks industry, Britvic manages to extract good growth from a very mature industry: soft drinks demand just about tracks GDP. That said, a bias towards at home consumption did mean that the hit from Covid was limited. Strong demand forlo/no sugar drinks, a fight back in the energy drink segment and growth in an exotic market should combine to allow Britvic to post comfortably double-digit EPS growth. Soft drinks feel like a fairly defensive market and here the PE and growth rate look to be out of kilter, potentially leaving some value on the table.

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