We have left behind a year in which the prices of goods and services worldwide saw one of the highest growth rates in recent decades. The 2022 annual consumer price index in the Eurozone was 8.4% while in the US inflation reached 8% last year, both levels not seen for several years. The Covid-19 pandemic and the Russia-Ukraine conflict have been among the main causes of this sudden increase in prices. These events have contributed to disruptions in global energy supply and supply chains, resulting in higher energy and manufacturing costs.
Despite the restrictive maneuvers implemented by the main central banks (primarily the ECB and the Fed), inflation seems destined to remain with us. In fact, even Bloomberg’s estimates for the current year remain well above the 2% target theorized by central bankers both in the Eurozone (where the forecast is 5.9%) and in the United States (the consensus is 3.7%). ).
The strengths of the Consumer Goods sector
In this context, it is necessary to have an active approach to portfolio construction, which includes assets capable of playing defense with a focus on fundamentals. Companies with solid fundamentals are often in defensive sectors such as Consumer Goods less sensitive to changes in the economy or inflation. Firms with pricing power, such as those with strong brands, may be able to pass on increased costs and preserve their profit margins.
Globally, consumer goods manufacturers are faced with continuous increases in production and operating costs, which are passed on to retailers and end consumers. Despite this transfer of higher prices, the latest balance sheets of European consumer goods manufacturers (such as Carrefour, L’Oréal and Zalando) show that, so far, they have been able to successfully defend their respective market positions.
14.2% annual yield with broad protection
An alternative way to invest in the Consumer Goods sector is to use investment certificates such as i Low Barrier Cash Collect di BNP Paribas. The new series on baskets of shares, listed on the SeDeX (MTF) of Borsa Italiana, is designed for investors looking for returns (between 10% and 20% per annum) who want to be exposed to the stock market with a time horizon of medium term (2 years), benefiting at the same time from protection of the nominal capital even in the event of declines of up to 70% of the underlyings thanks to the protection barrier observed only at maturity of the product.
Among the baskets of the new range we find the one (ISIN NLBNPIT1LT22) formed by Carrefour, L’Oréal and Zalando, which allows you to take a position on the retail sector. In detail, the certificate offers a quarterly premium with a memory effect of 3.55 euro (equal to 14.20% per annum) in the event that, on the respective observation dates, all the shares in the basket are equal to or higher than the Premium Barrier level . In particular, this BNP Paribas issue is characterized by the coincidence between the value of the Premium Barrier and the value of the Maturity Barrier, and their particularly deep level, set for both up to 30% of the initial value of the underlyings.
Intermediate and expiry scenarios
Starting in July, if on the quarterly valuation dates all shares in the basket trade at or above their initial value, certificates expire prematurely and the investor receives, in addition to the quarterly premium and the nominal value (100 euros), also any previously unpaid premiums thanks to the memory effect.
If the certificates expire (January 17, 2025), however, two possible scenarios are envisaged. In the first case, if the quotation of all the shares is equal to or higher than the Maturity Barrier level (30% of the initial value), the product repays the nominal value plus the premium with memory effect. Otherwise, if the quotation of at least one of the underlyings is lower than 30% of the initial value, the certificate pays an amount commensurate with the performance of the worst stock in the basket (with consequent partial or total loss of the invested capital).
The buys on the stocks in the basket prevail
The consensus on the three stocks of the basket collected by Bloomberg, which we report in the table above, it is basically positive. Almost all analysts recommend buying (buy) on Carrefour and Zalando with a small minority suggesting selling (sell). On L’Oréal, on the other hand, there is a substantial advantage between those who say they keep the shares in their portfolio (hold) and those who have a buy opinion. Furthermore, the 12-month average target price makes us understand that these underlyings are suitable for strategies with investment certificates, i.e. for those who have a lateral or moderately bullish view in the medium to long term.
WARNING
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