Pella Funds Management’s Jordan Cvetanovski has named two retail stocks he says stand out and are likely to ride out the current market volatility. Cvetanovski, chairman, chief investment officer and portfolio manager at Pella, named U.S. discount store Dollar General and U.K.-based apparel retailer JD Sports as picks during CNBC Pro Talks . While shoppers are quite stretched right now, they are set to carry on buying staples and may trade down, Cvetanovski said, which is likely to benefit Dollar General. “People will start thinking: Do I need to go to these expensive stores; can I find better value elsewhere and Dollar General offers that now. As a company, it’s delivered very, very consistently for decades now. It’s never really missed a beat,” he told CNBC’s Will Koulouris Tuesday. Cvetanovski, who is based in Sydney, Australia, also expects the retailer to open more stores. A consumer staple stock, Dollar General is part of the only S & P 500 sector to post returns over the month of April. The S & P as a whole fell 8.8% over the month — its worst since March 2020 — as investors digested the prospect of persistently high inflation and rising interest rates. The sharp decline of high-growth stocks has led some investors to reconsider more stable companies , such as consumer staples, with steady earnings growth and dividends. Dollar General’s stock closed at around $232 on Friday, and is down about 1.5% year to date. ‘A special case’ Cvetanovski also praised sneaker and sportswear retailer JD Sports Fashion , which has around 3,000 stores in 29 countries, for its management over the past 10 years. “They’ve done a wonderful job in terms of rolling out the store concept. It’s a very competitive space,” he said. “The fact that they’ve navigated these tricky waters so well for so long, and they’ve grown so consistently throughout the years, tells you something that these guys can manage a retail store.” JD Sports has room for growth in Europe and the U.S., Cvetanovski said, adding that like for like sales have not seen a huge slowdown, despite consumers spending less on fitness clothes than they did at the height of the Covid-19 pandemic. “Given the valuation and given the prospects over the next five years and given their ability to execute and what they’ve shown they can do in the past, we think it’s an enticing proposition,” Cvetanovski said. European stocks have also been hit by volatility over recent months. The Euro Stoxx 600 fell 1.2% in April although the FTSE 100 managed to post gains of 0.38% over the month. JD Sports is a consumer discretionary stock, however, and so has a different profile to consumer staple Dollar General, Cvetanovski’s other retail pick. And although he described it as an “exciting proposition,” he did note there were some uncertainties surrounding the stock. “This falls into that consumer [discretionary]. I said before, I don’t want to be in consumer discretionary, but here I am buying consumer discretionary,” he said. “I think this is a bit of a special case… The price is right.” JD Sports’ shares were trading around £126 ($154) on Monday afternoon, with the stock down over 40% year-to-date. Cvetanovski manages the Pella Global Generations Fund, which has an ESG — or environmental, social and governance — focus. Net of fees, the fund fell 3.1% in April. Its top 10 holdings include ASML , Microsoft , CME Group and Dollar General.
Pella Funds Management’s Jordan Cvetanovski has named two retail stocks he says stand out and are likely to ride out the current market volatility.
https://www.cnbc.com/2022/05/17/fund-manager-retail-stock-picks-to-ride-the-market-volatility.html