Five UK growth stocks to outperform in a slowdown

Liontrust First Growth and Liontrust First Opportunities fund manager Anthony Cross uses his 'Economic Advantage' investment process to pick stocks he believes may be unappreciated by the market.

Cross says there are 'huge swathes' of the UK stock market where growth will become increasingly hard to come by, but by picking sector winners displaying certain strict criteria, long term winners can be identified.

Under the process he has developed with Julian Fosh, the Citywire A-rated pair pick stocks that have high barriers to entry, and which are capable of consistently producing high returns.

For any UK stock to be picked for the funds, they must also have at least one of the following;

• Strong Intellectual Capital

• Strong Distribution networks

• High recurring revenue (with at least 70% reinvested in the business)

Cross believes intellectual capital is often under-appreciated by investors but is becoming ever more crucial in a globalised world.

'Companies with strong intellectual capital have a good opportunity to go out there and prove their expertise in markets around the world,' he says.

'These are intangible assets which allow these companies to sustain their pricing power, and if they have high barriers for entry for competitors, produce strong cash flow which can be reinvested into the business. It is a virtuous cycle.'

'If the company is UK-focused, like Hargreaves Lansdown, it would need to have very high barriers to entry and an easily replicable and standardised business model.'