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

"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,