Liberum has added three names to its ‘invincibles’ portfolio, predicting that cyclical stocks will continue to do well as a UK recession will come later than currently predicted.
FirstGroup (buy), Trainline (buy), and Serco (buy) are the UK additions to the portfolio as Liberum expects cyclical stocks ( ie geared to the performance of the economy) to outperform defensives in the second half of this year as inflation tops out and recession fears decline for now.
“In our view, we are not heading for recession in 2022 but only in 2023, which means that it is too early to become defensive.
"However, after three weeks of a bounce, we note that for now, stock markets in the UK and Europe have become slightly stretched, " it sid, which might lead to a period of consolidation before things pick up again.
In the UK, the Invincibles are 14.4% ahead of the FTSE All-Share notes Liberum while in Europe ex UK, the outperformance is somewhat 5%.
"The best performing Invincibles portfolio since inception is now the US, with outperformance over the S&P 500 of 17.5% after transaction costs."