Our 10 share picks for 2014
A team of experts top tips on where to put your cash in year ahead, writes James Moore
Published 07/01/2014 | 08:30
Should any of them take your fancy, do bear in mind that it's always wise to thoroughly research a stock before committing your own cash, and that prices can fall as well as rise. We're also probably due a bad year, but nonetheless, here is the 2014 Ten to Follow ...
The first is a gamble: Ladbrokes (178.9p). With three profit warnings, question marks over chief executive Richard Glynn and poor sporting results to boot, 2013 has been a year to forget for the UK's second-biggest bookie. The shares started the year at 200.5p and are now more than 10% off as the firm's poor online and smartphone offering left it stranded in the stalls.
But things are looking up. Ladbrokes signed a deal with software firm Playtech to use the Israeli firm's slick mobile platform, relaunching on iPhones and android early last month. Meanwhile its stores are still sucking in the punters.
Results have to turn in the bookies' favour sooner or later and it's a World Cup summer as well. This counts as a recovery play.
There's not much to love about Man Group (85p). It is, after all, a hedge fund manager. And it hasn't been a very good one in recent times. Good news has been in short supply at the troubled company. However, it did manage to post its first quarterly inflows in two years during the third quarter, stopping a seemingly irreversible decline.
Man Group's shares fell again last year but expect a better performance in 2014 as new boss Manny Roman and his team continue to cut costs and restructure.
This leaves the former FTSE 100 darling in an interesting place – with one non-executive recently admitting that the company will either be "sorted or sold" over the next few months. Expect the shares to rise in 2014 as a result.
Another recovery play is Genus (1297p). The growth in the number of people living in cities and demanding more meat and dairy products ensures that long-term prospects for the bull-sperm producer and piglet breeder should be rosy.
On to the smaller companies that can: Aim-listed Good Energy (229p) is a company we could find few faults with. It's the only UK supplier that gets all its energy from renewable sources (some it generates itself and the rest it buys from other small generators).
A recent corporate bond issue was so popular that they had to put a £15m cap on it.
Another small fry that we think could grow is software developer Fusionex (385p) which produces business intelligence software. It has been winning business like crazy, and putting the frighteners on some of the IT industry's big guns.
Broker Panmure has already been swooning over its future commercial prospects.
With these representing risky plays, we need a little ballast. Severn Trent (1705p) can provide it. Back in the summer a consortium of investors, including the Kuwaiti Investment Authority and Canada's Borealis Investments, reckoned it was worth more than £21 a share, and given it's now trading below £17 it could be worth a look.
The highly regarded Liv Garfield, who has experience of dealing with regulators in her current role at BT, is also set to take the helm of the blue-chip water group this spring.
Government contractor Babcock International (1355p) ought to be another fairly safe bet. It entered 2013 with its shares valued at around a tenner a pop: the stock exits at closer to £13. Expect another big rise for this FTSE 100 favourite in 2014, as Babcock continues to pick up work from one of its great rivals, the reputationally challenged, scandal-scarred Serco.
IG Group (616p) has given its investors a rocky ride of late, and its really stunning growth may be behind it. All the same, I like the company because when the economy improves its punters feel more confident about trading.
It isn't looking all that pricey at 15.6 times earnings for the year to the end of May 2014 falling to 14 times. And the yield is nearly 4%.
We've always been a little wary of airlines but IAG (401.4p) under Willie Walsh has been delivering. Now huge costs have been swept out of Iberian, both it and BA plus budget carrier Vueling look set to fly higher with global economic recovery.
What may cause it a few problems is if fuel prices start to rise.
In case they do, tuck away some Shell (2280p), with a dividend yield of nearly 5%. With lots of cash and able to afford to gobble up minnows with interesting exploration rights, Shell is as good a place as any to get exposure to resources.