LIVINGSTONE MARUFU
Research firm Morgan & Co is expecting consumer, food, agriculture and financial services sectors to perform well this year despite robust headwinds and approaching elections as the products and services remain critical even in hard times.
The economy is facing headwinds that include elevated inflation pressures, political uncertainty due to elections and restrictive monetary policy.
In its 2023 economics and strategy note, Morgan & Co recommended that investors put money in areas that stand against recession and other uncertainties in the economy.
“Given this backdrop, we continue to prefer a selective strategy that involves parking ZWL$ balances in defensive sectors that exhibit lower correlations to political events or elections.
“We are bulls on consumer, food, agriculture, and financial services sectors,” reads part of the report.
Morgan & Co recommended investors to focus on quality stocks.
“We continue to prefer balance and a tilt toward quality and well-managed businesses. Blue chip names like Delta, Innscor, Hippo Valley and Meikles Limited have a mix of defense and quality characteristics.
“The counters are expected to maintain strong earnings, and visibility while also continuing to benefit from the benefits of electioneering activities. Valuation metrics are also attractive,” Morgan & Co said.
Analysts recommended the investors resist the urge to time the markets.
Marketing timing involves moving all or a significant portion of a portfolio into or out of asset classes based on near-term market expectations.
Unfortunately, such a strategy is nearly impossible to accomplish in 2023, according to analysts.
“We think 2023 will be characterised by a high level of volatility- making it even more difficult to time. Instead of timing the markets with large allocation changes, we prefer more modest tactical adjustments for short-term investors,” the report said.
Morgan & Co said the preference for high-quality stocks should offer some attractive long-term entry points while markets remain volatile in the coming months.
The same patient and disciplined approach should also apply later in the year, it said.
The research firm made its 2023 stock picks recommendations where it picked Delta, Hippo Valley Estates, Innscor Africa and Meikles.
Delta recorded an increase in US$ to 67% of the total revenue and saw a decline in production constraints that were driven by forex shortages.
As a result, Delta ramped up sales volumes and resumed Capex projects which will further strengthen its position as a market leader amid Innscor upcoming sorghum beer.
On Hippo Valley, it is anticipated that the Kilimanjaro Project has taken off and we expect this to support volumes in the long term.
Innscor is expected to do good as the fast moving consumer goods sector’s resilience continues to hold on even as recession fears grow globally.
