13 ASX 200 companies that can combat inflation: Morgans
Morgans calls out 13 key all-weather companies most capable of resisting high inflation
Mentioned
KEY POINTS
- Morgans calls out 13 "all-weather" companies most capable of offsetting cost inflation
- Operating leverage and margins will come into focus this reporting season
- Companies with competitive edges and/or dominant market positions are more successful at offsetting margin pressures
Morgans said operating leverage and margins will come into keen focus in August reporting season.
February reporting season showed that S&P/ASX 200 companies with competitive edges and/or dominant market positions are more effective at offsetting margin pressures, Morgans analysts said in a 'Reporting Season Playbook' note last week.
Factors which support tenacious margins include:
Cost out (large cap franchises, banks and telcos)
Product premiumisation (high end retail)
Productivity gains (materials, banks)
Cost pass through (industrials, discretionary)
The broker called out key "all-weather companies" that are best positioned to fend off rising cost inflation.
Morgans' all-weather companies
Company | Reason |
|---|---|
Woolworths | Dominant market position. Margin pressure offset by cost out, store renewal and convenience programs |
Coles | Dominant market position. Cost out program to offset packaging inflation. Has strong penetration with high margin private label products |
CSL | Dominant market share. Plasma collections expected to recovery, buoys margins |
ResMed | Dominant market position with growing penetration in emerging and development markets |
Amcor | Leader in flexibles and rigid plastics with "in-built rise and fall mechanisms" to offset higher raw material prices. Can pass on higher prices |
REA Group | Dominant market position. Has the ability to exploit market position and lift prices |
AGL | Sheltered from increases in fuel costs due to long-term contracts or its own mining operations |
Seek | Dominant market position and able pass on higher prices |
ALS | Strong volumes reflect the company's "essential service status". Potential to raise prices in FY23 |
Corporate Travel | Positioned for travel rebound, with higher market share and lower cost base than pre-covid levels |
Aristocrat | Leading market position in land-based gaming products with strong pricing power |
Treasury Wines | Market leading brands and now focused on 'premiumisation' strategy |
PWR | High-end cooling solutions with little to no competition |
Source: Morgans
