Are these 3 Consumer Cyclical Stocks most sought after on NZX?

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Are these 3 Consumer Cyclical Stocks most sought after on NZX?

 Are these 3 Consumer Cyclical Stocks most sought after on NZX?

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Summary

  • Consumer cyclical companies fared well in 2020.
  • The Warehouse Group performed well during the recent Auckland lockdown, but uncertainty remains amid COVID-19.
  • NZME expects to pay dividends and growth in profits in 2021 amid improved conditions.
  • Fletcher Building Limited expects profit to be in the range of $610 million-$660 million in FY21.

Consumer cyclical stocks include companies producing durable and non-durable consumer goods, which are affected by changes in the overall economy. Consumer cyclicals consist of cars, airlines, furniture, and other discretionary spending.

Consumer discretionary sector in NZ performed well in 2020 and bounced back in late 2020.

There has been a shift in shopping preferences of consumers as they do more shopping online for necessities while uncertainty still hovers over many small enterprises and travel firms.

Source: © Rawpixelimages | Megapixl.com

Cyclical companies follow the developments happening in the overall economy, which make their stock prices quite volatile. While Investors cannot monitor the economy's fluctuations, they can make their trading strategies adapt to the rise and fall of the market. Identifying how businesses interact with the market is essential for responding to economic changes.

Let’s have a look at these 3-NZX listed consumer discretionary stocks amid challenging environment.

The Warehouse Group Limited (NZX:WHS)

The Warehouse Group posted record rise of 140.2% in NPAT of $11 million in H1 FY21 on pcp after witnessing disrupted trading conditions in 2020.

The Group sales increased 7.4% to $1,808.3 million while online sales grew 50.3% during the period. All 4 brands of WHS reported record operating profits.

The Group declared an interim dividend of 13cps for FY21 after announcing a special dividend of 5cps in February. The dividend is due to be paid on 22 April. The Group traded well through recent Auckland Level 3 lockdowns, but significant uncertainty still lingers as the COVID-19 environment evolves.

While the Group fared well during the recent Auckland Level 3 lockdowns, there remains significant uncertainty amid COVID-19.

On 29 March, at the time of writing, WHS was trading at $3.74, up 2.75%.

NZME Limited (NZX:NZM)

NZME Limited, Auckland-based premier integrated media company, announced a 13% decrease in the Group sales last year, but an increase in operating numbers on pcp. In 2020, the Company maintained its emphasis on effective capital management, resulting in a dramatic decline in net leverage from $74.7 billion on pcp to $33.8 million as of December 31, 2020.

Based on existing results and NZME's superior capital position, the Board plans to pay dividends in the second half of 2021. The Group expects profit growth in 2021 amid improved revenue trends, lasting cost reductions and COVID-19 recovery.

On 29 March, at the time of writing, NZM was trading flat at $0.85.

Fletcher Building Limited (NZX:FBU)

Fletcher Building Limited, a prominent supplier of building products and solutions, posted strong performance in H1 FY21. The steps taken by the Group to improve operating disciplines and efficiencies over the past 3 years have helped it achieve improved earnings and profits.

EBIT before significant items stood at $323 million in H1 FY21, up 47% from $219 million in pcp, while Group EBIT margins increased to 8.1% from 5.5%, with progress across all operating divisions.

The Board also declared an interim dividend of 12cps in February 2021, which was paid on 24 March 2021. The Group’s EBIT before significant items guidance is expected to be between $610 million and $660 million in FY21.

On 29 March, at the time of writing, FBU was trading at $6.94, down 0.14%.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)

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