4 ASX 200 shares going gangbusters in high inflation (and what they have in common)

It’s been a tug of war between bullish and bearish forces so far this year.

The S&P/ASX 200 Index (ASX: XJO) started the year with a 9% rise into February, but then pretty much lost all those gains by mid-March. Since then it has leapt back up again to the tune of 6.5%.

This violent whipsawing is due to the Reserve Bank of Australia and US Federal Reserve’s fight against rampant inflation.

They have raised interest rates steeply over such a short interval that the market doesn’t know whether to be depressed because of a possible recession or upbeat because the rate rises are about to cease.

After more than ten months of this battle, the annual inflation rate in Australia remains at a worryingly high 6.8%.

But, believe it or not, there are certain ASX 200 stocks that are thriving in this environment.

How these stocks have all risen in 2023

According to IML portfolio manager Daniel Moore, some ASX sectors fared better in the March quarter than others.

“Consumer discretionary stocks had a massive quarter — they were up 10% for March. The other big one was communications,” Moore said in an IML video.

“On the negative side, not surprisingly, the financial sector was down around 3% because of that impending banking crisis in the US. So some mixed results.”

Within the IML portfolio, he named four ASX 200 shares that have outperformed this year, recording double-digit gains.

“We had a lot of great performance in the quarter. A lot of that were stocks we’ve talked about recently, that had really good reporting seasons,” Moore said.

“Whether it was Brambles Limited (ASX: BXB) or Sonic Healthcare Limited (ASX: SHL), or Steadfast Group Ltd (ASX: SDF), we had a number of really strong performers. Lottery Corporation Ltd (ASX: TLC) was another, all up in the teens.”

While these stars play in vastly different industries, ranging from health to industrials to insurance to gambling, they have common attributes that make them a success in the current climate.

“What was interesting, all those businesses are market leaders,” said Moore.

“And they’re all managing this inflationary environment very well, either exercising pricing power or managing their costs or winning market shares.”

Sonic Healthcare shares are up 20.9% for the year so far, while Brambles has climbed 16.7%. The Lottery Corporation and Steadfast Group share prices are both around 9% higher than where they started the year.

The post 4 ASX 200 shares going gangbusters in high inflation (and what they have in common) appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Steadfast Group. The Motley Fool Australia has positions in and has recommended Steadfast Group. The Motley Fool Australia has recommended Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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