Stocktake

The last few years have seen strong returns from equity markets with sentiment towards shares well supported by low interest rates, economic growth and strong company profit results.  This period of strong performance has also been associated with low volatility, which is unusual for share markets.  Towards the end of 2018 some of the factors supporting recent share market returns start to change; equities fell, and we saw a return to more normal levels of market volatility.  Increased market volatility provides opportunities for active investors to take advantage of changing share prices, acquiring holdings in good quality companies at more attractive valuations. 

Below, we take a look at several companies that despite changing market conditions exhibit defensive and stable cashflows and are reporting rising demand for their products and services.  You may hold shares in these companies through your investment in the funds managed by BT Funds Management (NZ) Limited, the investment arm of Westpac in New Zealand, including the Westpac KiwiSaver Scheme, Westpac Active Series and the Westpac Premium Investment Funds.

 

Nestle (Switzerland)

Founded in 1886, the swiss food giant operates more than 2000 brands and sells its products in over 190 countries around the world.  The company at the end of 2018 reported a solid profit result on the back of continued strong demand for its products and successful cost-cutting measures.  The company highlighted strong underlying or organic growth in some of its emerging markets in Asia, the Pacific and Africa where sales grew by 9% and pointed to sales momentum in its key US and China markets which collectively account for 40% of sales.  

 

Proctor & Gamble (US)

Proctor & Gamble is a global consumer goods company headquartered in Ohio.  In New Zealand, the company distributes household brands such as Gillette, Oral B, Vicks and Ojay.  The company at the end of 2018 reported it had grown its profits by about 12% compared to a year earlier.  Alongside its results, Chief Executive Office David Taylor reported strong consumption and sales in the first quarter with the firm’s “focus on superiority, productivity and improving P&G’s organisation and culture driving improved results.”

Resmed (US/AU)

The dual US and Australian listed company is most well known for its sleep apnea products enabling its consumers to live healthier lives.  The company has a market capitalisation of around $US17bn, about 4 times the size of Fisher and Paykel Healthcare, one of its key competitors.  The company in late October released an impressive profit result, exceeding market expectations and reporting good growth in all its key markets.