UK consumer stocks show potential for recovery despite discounted valuations

From Investing.com: 2024-11-29 15:43:01

Retailers in the UK have seen a potential rebound in valuations, with the All-Share Retail index showing a 23% increase in earnings per share over the past two years. Despite this, many consumer stocks remain discounted, with valuations 13-20% lower than pre-COVID averages for some companies.

Analysts predict a brighter outlook for UK consumer spending by 2025, supported by real income growth and easing household savings ratios. November’s uptick in GfK’s UK Consumer Confidence Index suggests a potential acceleration in retail sales growth. UBS has identified top stock picks for 2025, including companies like B&M, JD Sports, and Dunelm.

Key themes shaping the consumer sector include supply-chain resilience, cost pressures, AI adoption, and M&A activity. Analysts anticipate continued consolidation in the sector, favoring companies with scale and financial strength. With inflationary pressures easing, consumers are expected to increase retail activity as confidence grows, leading to a clearer path to recovery.



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