Source: Sharecast
Although all four companies don't have significant operations in the US – with the exception of JD Sports – RBC highlights the recent outperformance of discount and off-price retail in the current operating environment.
The news follows second-quarter earnings season by US-listed companies, which indicated an improved outlook for the second half and beyond.
"Following a softer start to the year, this round of results have generally come in ahead of expectations for US consumer discretionary names," the broker said in a research report on Monday. "We note a particularly strong performance from the likes of TJX and Wal-Mart, with strong exit rates (helped by back-to-school spend). We think this speaks to strong engagement from consumers with discount exposure."
"We've seen similar trends playing out in Europe, hence our preference for discount names with relatively undemanding valuations," RBC said.
This readacross is positive for Primark owner AB Foods and B&M, in particular, RBC says.
Meanwhile, JD Sports is the most exposed to the US region, which comprises around 30% of its group revenue, followed by WH Smith, which has roughly 25% sales exposure.
RBC maintained its 'outperform' ratings on all four stocks.
