Our Investment Research Analysts give their recommendations for some festive stocks.
Stocks for your Christmas stocking
A pair of socks you don't need, a book you won't read, a woolly jumper that doesn't fit, and another box of chocolates: Christmas gifts, however well-intentioned, can get a little predictable. So this year, why not treat yourself to a gift that will keep on giving?
As ‘tis the season for giving, Investment Research Analyst Graham Spooner recommends the following stocks that yule likely see prosper in the New Year.
International drinks group with a focus on spirits which has benefitted from sales growth in major emerging markets. The strength of its brands, which includes Tanqueray gin, Smirnoff vodka and Johnnie Walker whisky, can be highlighted over the festive season giving the shares a defensive quality. Revenue growth has been impressive as has share price performance over the last three years. A fall in the share price from an all-time high in September provides a better entry point for further festive cheer.
The group’s aims of “buy, improve and sell” might not appeal to everyone, but the track record of management, who have many years’ experience and success in the engineering field, is worth noting. The focus remains on GKN which was acquired in 2018. So far trading updates have been reassuring with management continuing to be confident of unlocking significant further shareholder value.
With consumer demand for healthier diets and manufacturers cutting sugar content, the group could find themselves in a sweet spot. Momentum in the business has been growing with the November results highlighting good growth in its speciality ingredients business allied to cost cutting. A prospective dividend yield of around 4.2% is an added attraction.
There is always room for a surprise stocking filler, in this case a small AIM company which has credentials that will satisfy the green lobby. Around 60% of the business is geared to providing engineering support services to offshore wind projects. There have been some significant contract wins in 2019 and with offshore wind capacity forecast to grow 15-fold over the next twenty years the group could be well positioned to take advantage of the predicted growth.
The performance of the trust has improved significantly in recent years and currently would give exposure of around 46% to North America, 18% to emerging markets and 14% Europe. The aim is to achieve capital growth through investments in international equities, with a wide range of stocks. Leading holdings include Amazon, Alibaba and Prudential.
Investing is a long-term game, and Christmas comes but once a year, Investment Research Analyst Joe Healey suggests you treat yourself this year with the following stocks
The consumer credit reporting company continues to pursue growth opportunities while maintaining secure leverage levels and generating robust cash flows and margins. Despite the shares trading on a relatively high valuation of roughly 28x, the company is well-positioned to capitalise on the growing data market.
Managing retail electronic payments and global financial services, this company is likely to have indirect touch-points in our everyday lives. As well as heavy growth prospects through the company’s strong investment into technology, it also offers defensive characteristics through its recurring revenues, high incremental margins and robust free cash flows. As the company continues to grow its global payment network in an ever-growing market while regularly developing its own technological capabilities, it is likely we will see continued growth as we move towards a more interconnected future.
New drug releases have continued to sell well in 2019 with operating profits and sales up roughly 10% spurred by favourable demographics. This stock is defensive in nature with strong recurring cash flows and a competitive forward dividend yield against peers. With a strong product pipeline, good diversification and a management focus on expansion into emerging markets, this makes the stock a solid core holding in investor’s portfolios.
Growing geo-political tensions have placed more emphasis on defence budgets with the likes of NATO aiming to implement defence budgets of 2% of GDP. The US and the UK are the biggest markets for BAE, who both maintain healthy budgets. The Middle East also remains a bright spot with Saudi Arabian orders strong. With contracts generally being longer-term, the company benefits from relatively predictable incomes. Currently trading below peers at roughly 11x forward earnings and offering a peer beating forward dividend yield of around 4%, the stock is attractive.
Currently benefitting from the increasing demand from retirement and savings products in light of ageing societies, the group has performed well in winning bulk annuity deals and with the new CEO shaking up the group’s corporate structure in a bid to revive investor interest, we see potential. Currently trading at an attractive forward price multiple of roughly 6.5x alongside an attractive dividend yield of around 8% this is worthy of a stocking filler.
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.