Laurence Hulse: Stocks that fund managers say seem well positioned to fight high inflation

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In December, UK inflation topped 30-year highs of 5.4%, putting pressure on investors to seek higher yields or lose real money. With bond yields low and savings accounts earning rates close to 0%, riskier assets like stocks were the logical choice. But volatile markets haven’t made it easy to decide which stocks to own and which to avoid. One of the ways savers can preserve their purchasing power is by investing in companies that are poised for broader economic growth or are able to pass on rising costs.

Laurence Hulse, co-manager of LF Gresham House UK Smaller Companies Fund, chose Ten Entertainment Group, a ten pin bowling facility operator.

He said the management team has proved adept at handling input cost inflation over the past year – particularly labor costs, which they have combated by incentivizing staff.

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Inset: Laurence Hulse of Gresham House

“Even more impressive was the investment in digital pricing mechanisms and the overhaul of the CRM during the lockdown. Together with the strong market position, this allows the group to offset any inevitable inflation,” he said.

In addition to his ability to control inflation, he also said there are other upside drivers for the company.

“It is ideally positioned to capture the growth in the ‘experiential leisure’ trend through renovation and improved use of technology to increase attendance, and three to four new venues continue to open each year,” he said.

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Fry Electronics Team

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