Weber (WEBR) - Get WEBER, INC. Report grill company, restaurant chain Wingstop (WING) - Get Wingstop, Inc. Report and security company Brink’s (BCO) - Get Brink's Company Report represent small-cap stocks that can withstand the force of inflation, says Goldman Sachs.
It has buy ratings on them along with several others in the same category.
“Rising input costs, supply chain challenges and labor constraints continue to be front and center issues for corporates and investors,” Goldman analysts wrote in a commentary.
“Specifically, our Portfolio Strategy team estimates that Russell 2000 labor costs equate to 16% of aggregate revenues vs. 11% for the S&P 500, making them more vulnerable to rising wages.
“Given these headwinds and decelerating economic growth, we look for companies where Goldman Sachs analysts expect higher gross margins (suggesting pricing power/ability to pass through) and expanding EBIT margins (operating leverage) through 2022.”
Goldman highlighted the following comments from Weber’s earnings call last month:
“We're making significant progress against our Make Where We Sell strategy and delivering on margin improvement initiatives, even as our teams manage through what continues to be a very challenging commodity and global logistics environment.”
Weber closed Friday at $16.48, up 2%.
Goldman highlighted the following from Wingstop’s July earnings call:
“The brand has adequate pricing power to continue to follow the inflationary trends that are in the market.” Wingstop closed Friday at $157.78, down 2%.
Goldman highlighted the following from Brink’s July earnings call:
“Sustained SG&A cost reductions and other fixed cost expense reductions have been realized through our recent restructurings and last year's targeted cost takeouts.”
Brink’s closed Friday at $63.56, down 2%.