There are two stocks in the healthcare and infrastructure space which can help investors gain defensiveness in their portfolio, according to T.Rowe Price.
The companies that would be best able to manage through this period will likely be companies with strong pricing power, differentiated products, good industry structure and defensive volumes.
This included Resmed in the healthcare space and Transurban in the infrastructure sector.
Randal Jenneke, head of Australian equities at T. Rowe Price, said: “Resmed for example has a large underpenetrated market, and despite various input and logistics cost pressures, has been able to pass through price increases given their dominant market share and current lack of reputable competition.
“In infrastructure, Transurban for example has built-in price increases for its contracts. The nature of its cost structure brings high EBIT margins and margin stability. Anecdotally, you know the cost of tolls are rising when every second taxi driver makes a point or two about it.”
Shares in Resmed were down 14.5% since the start of the year and 5% over one year to 30 June while Transurban was up 4% since the start of the year and 0.4% over one year.
Comments
Its most likely T Rowe added these two companies to its portfolio last week and is doing everything it can to push up the price for its own benefit.
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