Berenberg names JD Sports and Curry's among top consumer stock picks

Berenberg has said it has a positive stance UK consumer stocks heading into 2025 due to depressed valuations and improving macro trends, naming JD Sports, Curry's and Dunelm among the best picks in the sector.

"Two years ago, the FTSE All-Share Retailers index de-rated due to market fears that inflation would erode consumer spending power. In terms of volumes, it did exactly this; however, inflation kept the value of retail sales buoyant, providing leverage over costs for the industry," Berenberg said in a research note on Friday.

In the meantime, average earnings per share from UK-listed retailers have risen 23%. And while price-to-earnings ratios have increased to 11.5x from 9x two years ago, they still remain 13% below the sector's 20-year historical average of 13.3x.

"Valuations across our coverage remain somewhat more depressed.[...] These undemanding valuations, combined with our optimistic outlook for a pick-up in consumer spending over 2025, support our largely positive recommendations across our coverage," the broker said.

Berenberg's top picks for 2025 are B&M, Card Factory, Curry's, Dunelm, JD Sports and Warpaint, stocks which the broker said offer growth, yield or value – or a combination of all three.

"The companies themselves are backed by strong brands that drive clear market-leading positions in their respective verticals, with scale and differentiated business models that provide sustainable, long-term competitive advantages," Berenberg said.

The broker has also initiated coverage with 'buy' ratings for AG Barr, Hilton Food Group, Next, Nichols, Premier Foods and Victorian Plumbing,