20th December 2013
While stockmarkets have endured their fair share of wobbles throughout the past year, all-in-all 2013 has been a good year for equity investors writes Philip Scott.
Year-to-date, the UK’s benchmark index, the FTSE 100 is ahead by 16%, the wider FTSE All-Share is up 18% while across in the US, the S&P 500 has soared by no less than 29%.
Investors both professional and retail have high hopes for more and better gains to come in 2014 as the global economic recovery makes further ground.
We looked at five stocks tipped to fly over the coming 12 months.
Utilities have long been tarnished with the ‘dull but worthy’ label but not without good cause, as during times of trouble, these are the stocks that typically hold their ground . And while investors may never see firms in the sector fly, they are at least compensated by a decent dividend. Over the past 12 months National Grid, which runs the UK’s gas pipe network and owns generator Niagara Mohawk in the US has witnessed its stock rise by 11% and presently the business is offering a prospective yield of around 5.4%.
Sheridan Admans, investment research manager at The Share Centre, is backing the stock for 2014. He says: “Having settled its pricing structure with regulators in both the US and UK during 2013, the company is now in a much stronger position for the year ahead. Also, whilst political pressures have hit others in the sector, National Grid has not been exposed to this. Another positive for investor is that in March the group announced the dividend will grow in line with inflation from 2014.”
The FTSE 100 listed bookmaker, originally established in1934, now runs has a chain of some 1,600 betting shops. The shares have jumped 20% in the past year and with the World Cup taking place in 2014, experts are optimistic that the business, and investors, can prosper further. It recently snapped up three sports books in the US, to form William Hill US, offering investors the potential of a great growth opportunity should regulations there be relaxed. Another one of The Share Centre’s tips for 2014, the broker is optimistic that the attention it has paid to its corporate structure and strategy in various segments of its operation should start to pay off. In addition, a recent fall in its share price – it has loosened by 7% over the past three months – could provide a good entry point.
UK insurer Aviva has enjoyed a 14% share price rise in the past 12 months and is tipped as a good recovery pick, which could ride the improving global economy. Investors however need to be comfortable with the majority of exposure to the UK and Europe, and some in Asia, and should consider drip-feeding in to the stock notes Admans. While the group cut its dividend from 10p to 5.6p in 2013, it still remains an attractive yield and the reduction should help bolster the business. The company completed the sale of its US business in October, which is considered an important step in simplifying its operations and its turnaround and delivering on cash flow generation is progressing.
Earthport is a financial services organisation which focuses on international payments for companies such as IBM. Listed on the FTSE AIM All-Share index the software and computer services firm has seen its stock’s value leap by 71% over the 12 months. It is currently trading at circa 28.25p per share and despite its strong rise the analyst consensus across share data portal Digital Look, has the shares rated a ‘strong buy’. Just this week, broker Panmure Gordon re-iterated its ‘buy’ recommendation while Admans also recommends Earthport as a stock to consider in 2014.
He says: “During 2013 Earthport signed up 21 new customers, including some notable market leaders such as, Bank of America and American Express. We recommend Earthport as a ‘buy’ as it attracts high calibre partners and customers, with a platform that has barriers to entry and is scalable.”
Another FTSE AIM All-Share listed firm, Incadea is an international software and services provider for the automotive retail and wholesale market. It is currently trading at 114.50p per share. In the last year Incadea’s share price has ranged from 105.50p to 134.50p and brokers are currently rating this stock as ‘strong buy’ says Digital Look. It is a higher risk, smaller company idea that may interest investors as it establishes itself in a niche market and management highlight potential contract wins ahead says Admans.
He adds: “Like many emerging software companies its product has the advantage of improving performance and efficiency. The company has concentrated on developing into new emerging markets, especially the BRIC markets (Brazil, Russia, India, China), where opportunities are far greater than parts of Europe.
“The company has been operating for 10 years and management has good experience within the car industry. It has a presence in around 80 countries and 2000 dealerships including BMW, Nissan, Mercedes and VW.”