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Stocks for higher rates in a soft landing
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Johan De Silva
Posted: 01 January 2024 13:40:51(UTC)
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Alpha Group (ALPH)
Has anyone researched this one? Very little media coverage so that's usually a tick...

ALPH was recently a strong growth stock boosted by the higher rate environment on its cash. While it has a punchy P/E it has a strong balance sheet that is in net cash. It is fast growing but lower rates may mean a lower ROE than when rates had been going up, and a director sell did not help as well as JPMorgan had taken some profits in some trusts.

The investment case is it has not caught up with the wider bounce in small caps and if we get a soft landing there may not be a need for central banks to cut rates hard or even pivot!
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Phil 2 on 07/01/2024(UTC)
Johan De Silva
Posted: 07 January 2024 19:26:45(UTC)
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I have updated my thread and title to attract more attention. I am seeking stocks that can perform well in a high-rate environment while also being resilient in a recession and soft landing. I am unable to find any funds or ETFs that meet these criteria. Two companies that I have identified as potential candidates are Alpha Group and Bank of Georgia. These companies have strong balance sheets with net cash and are less impacted by high rates due to their lower cash holdings and directly benefit.
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Phil 2 on 07/01/2024(UTC), Raj K on 08/01/2024(UTC)
Phil 2
Posted: 07 January 2024 22:56:31(UTC)
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Joined: 20/07/2018(UTC)
Posts: 2,108
Due to my lack of imagination, I can only think of LGEN due to its relative resilience during various inflation and rate scenarios. And possibly through a not-too-savage recession (TBC). Its financial performance being more resilient than its share price mind you!
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Ian Eccles
Posted: 08 January 2024 07:37:38(UTC)
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Joined: 04/07/2021(UTC)
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There was an article on 2nd Jan 24 in Citywire regarding the Georgian banking system which was interesting.
Due to the geopolitical situation I decided better opportunities on the home front.
Regarding Alpha, it seems its main income comes from the FX broker side of the business which is a crowded area with plenty of players.
Good luck.
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Johan De Silva
Posted: 08 January 2024 08:12:40(UTC)
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Ian Eccles;292037 wrote:
There was an article on 2nd Jan 24 in Citywire regarding the Georgian banking system which was interesting.
Due to the geopolitical situation I decided better opportunities on the home front.
Regarding Alpha, it seems its main income comes from the FX broker side of the business which is a crowded area with plenty of players.
Good luck.

In that case, most other stocks that have any sort of moat would be hit by economic slowdowns....even UK banks and LGEN?

So focusing on balance sheet strength, buybacks, and dividends I could come up with Grafton Group Plc (GFTU) but as the boat sailed last month its one I won't buy now. GFTU is one for the watch list for future investment, possibly around UK election. Worth a look at the balance sheet.

Alternatively, others will say to look to the US Trusts like Browns Advisory Small Caps to compliment JUSC. But I really want something growth but robust under all economic conditions that is UK-listed.
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Hilda Ogden
Posted: 08 January 2024 08:24:59(UTC)
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Joined: 31/07/2023(UTC)
Posts: 883
If we are heading towards a lower interest environment with a slow but steady pick up in economic growth, a couple of UK shares spring to mind. Halma, a highly diversified business with a number of highly specialised businesses and Croda similar but in specialty chemicals might continue to recover nicely. Halma is already on track and Croda is off share price lows but still back where the price was 5 years ago. I hold Halma and am mulling over buying some Croda.
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Raj K
Posted: 08 January 2024 08:37:02(UTC)
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Joined: 22/04/2016(UTC)
Posts: 2,818
I will confess I know nothing about macroeconomic stuff but I would have thought the high quality and more specialist insurance companies that have consistent underwriting profit will benefit from the higher interest environment on their float, essentially free leverage. I hold Markel and recently started a position in Fairfax Financial although the SP of that has run away from me. Also arent insurance companies pretty resilient in arecession, we still need it?

Blue Whales Stephen Yiu keeps on going on about Charles Schwab and the client monies ( the cash) and the higher interest rate is a tailwind for them. Maybe HL will benefit in the same way here?
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Gary J
Posted: 20 January 2024 11:20:19(UTC)
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Joined: 22/02/2020(UTC)
Posts: 610
Johan De Silva;291450 wrote:
Alpha Group (ALPH)
Has anyone researched this one? Very little media coverage so that's usually a tick...


Include interest income from client balances and the PE is single digit. (This doesn't seem wholly inappropriate; interest income is an essential feature of the business but, certainly, is somewhat at the mercy of monetary policy.)

Very cheap historically. Very cheap given the continued growth of the underlying business and the quality of management. Pretty odd that it's sat at the bottom of a multi-year trading range.

The alternative banking division has considerable potential. US and Asia banking licences were applied for c 12 months ago. When they drop, account numbers - already growing very nicely - will be given a very handy boost. If rates remain about where they are, interest income may begin to boggle minds.

My sole mid to long-term concern: What does AI do to the FX business? I have no idea.
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Hilda Ogden
Posted: 13 June 2024 09:54:01(UTC)
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Joined: 31/07/2023(UTC)
Posts: 883
Hilda Ogden;292044 wrote:
If we are heading towards a lower interest environment with a slow but steady pick up in economic growth, a couple of UK shares spring to mind. Halma, a highly diversified business with a number of highly specialised businesses and Croda similar but in specialty chemicals might continue to recover nicely. Halma is already on track and Croda is off share price lows but still back where the price was 5 years ago. I hold Halma and am mulling over buying some Croda.

A very satisfactory couple of days for Halma shareholders.
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Jay P on 13/06/2024(UTC)
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