Retail stock picks to ride the market volatility
Jordan Cvetanovski from Pella Funds Management has named two retail stocks which he considers to be exceptional and will weather the market volatility. Cvetanovski was named as chairman, chief investment officer, and portfolio manager of Pella. He made the selections at CNBC Pro Talks. Cvetanovski stated that while shoppers may be stretched financially right now, they will continue to buy staples and might trade down. This is likely to help Dollar General. Dollar General is offering better prices than these stores. People will wonder if they need to shop at such expensive places. It’s been delivering consistently over the decades as a company. He said that the company has never missed a beat.” CNBC’s Will Koulouris spoke to him Tuesday. Cvetanovski (who is located in Sydney, Australia) also hopes that the retailer opens more shops. A consumer staple stock, Dollar General is part of the only S & P 500 sector to post returns over the month of April. The S & P as a whole fell 8.8% over the month — its worst since March 2020 — as investors digested the prospect of persistently high inflation and rising interest rates. Investors are starting to look at more stable stocks, like consumer staples with consistent earnings growth and dividends, due to the sharp fall in high-growth stock markets. Dollar General closed Friday at about $232 and has fallen 1.5% over the past year. Cvetanovski praised JD Sports Fashion (a sneaker and sportswear retailer that has approximately 3,000 locations in 29 countries) for their management of the company over the past ten years. Cvetanovski said, “They have done a fantastic job of rolling out this store concept. “It’s very competitive,” he stated. The fact they have managed these complicated waters over the years and grown consistently through the years is a sign that these men can handle a retail shop. Cvetanovski stated that JD Sports is open to growth in Europe as well as the U.S. and added that there has been no slowdown in like-for-like sales despite the fact that consumers are spending less on their fitness clothing than at the peak of the Covid-19 pandemic. Cvetanovski stated that the company is attractive because of its valuation, the prospect for growth over five years, and their ability to deliver on past performance and the execution capabilities. Over the past months, volatility has also affected European stock markets. The Euro Stoxx 600 dropped 1.2% in April while the FTSE 100 saw gains of 0.38%. JD Sports, a discretionary consumer stock, is not the same as Dollar General (Cvetanovski’s second retail choice). Although he called it an “exciting proposition”, he acknowledged that there were uncertainties around the stock. It falls within the consumer category. [discretionary]. He said, “I said that I didn’t want to work in consumer discretionary. But here, I am purchasing consumer discretionary.” I think that this case is somewhat unique… It is a good price. JD Sports’ shares were trading around £126 ($154) on Monday afternoon, with the stock down over 40% year-to-date. Cvetanovski manages the Pella Global Generations Fund, which has an ESG — or environmental, social and governance — focus. In April, net of fees the fund lost 3.1%. The top 10 holdings are ASML, Microsoft, CME Group, and Dollar General.
Jordan Cvetanovski from Pella Funds Management has identified two retail stocks which he considers to be exceptional and that are most likely to weather current market volatility.