The stock market has continued to face uncertainty this week as investors weigh the risks of inflation and higher rates on the general economy.
JD Sports, B&M, and ABF are highlighted as this week’s three stocks to watch as they provide some intriguing readings and potential volatility.
- JD Sports shares have had a difficult last six months, falling 23%.
- However, Berenberg labelled the retailer as its “top pick” and raised its price target to 225p.
- The investment bank believes that JD offers extreme value given its quality and growth.
- However, regarding JD Sports online web traffic, we can see a significant decline, falling back to pre-pandemic levels.
- B&M shares have had a volatile week following a double-downgrade from JPMorgan.
- JPMorgan downgraded B&M to Underweight from Overweight as they are taking a cautious stance on the sector.
- Additionally, JPMorgan believes its current sentiment and valuations make for an unnatractive risk-reward.
- However, Shore Capital raised B&M shares to Buy from Hold.
- The discount retailer has continued to benefit from consumers trading down to cheaper retailers due to inflationary pressures.
- B&M has also recently purchased up to 51 Wilko stores as its rival collapses, advancing its long-term plans for 950 UK stores.
Associated British Foods
- ABF reports its pre-close trading update on Tuesday.
- So far, ABF results have been smooth sailing, with its Q3 results highlighting growth across all major categories and group revenue gaining 16%.
- As for Primark, its value proposition has resonated well with consumers, with total sales up 13%.
- The group raised its operating profit guidance, stating it would be moderately ahead of last year.
- As consumers income continues to be squeezed, results for Q4 may be more moderate, but the group has performed well in a year that has seen them hike prices.
By James Fyeman