The American screenwriter William Goldman, in his autobiography Adventures in the Screen Trade, famously observed that “nobody knows anything”. What applies to Hollywood producers has a certain relevance to Fleet Street’s finest. The FTSE All-Share generated total returns of over 21% last year, and yet at least two tipsters saw their overall recommendations lose money. In the immortal words of Gordon Gekko, if these guys owned a funeral parlour, nobody would die.
To make money from the stockmarket in 2013, you had to do just one thing: avoid mining shares. The mining sub-index fell by 16%, while industrial metals and miners fell by over 51%. Whether the likes of gold and silver will enjoy their day in the sun in 2014 will likely reflect the smoothness with which central banks start to roll back monetary stimulus. But almost every other sector enjoyed a positive return last year. This year is liable to be more problematic, I suspect, primarily due to fears of tapering, rising pressure on interest rates, and the still unresolved eurozone bank crisis.
I went with The Independent last year, and to its credit its picks returned on average 55%, helped by a blistering 248% return from holiday company Thomas Cook. The Times, which also delivered a 55% return, tipped Thomas Cook too. This year The Times has a specific focus on energy and resources, including President Energy, Kazakhmys, John Wood and BG Group – which is punchy, but a little rich for my blood, not least since I expect global growth to be more likely to disappoint. The Sunday Times delivered a creditable 17% last year, and in this year’s tips it includes RIT Capital Partners, one of the better diversified investment trusts.
The Daily Mail (whose tips last year ended down 6.9% on average) takes a leaf out of The Times’s book and plumps for energy services plays, including Amec and SeaEnergy. Once again, I shy away from industrial cyclicals.
The pick of the bunch for me this year is Investors Chronicle. Its portfolio is exposed to risk in the form of commodities prices, with its choice of AngloAmerican, but I like HSBC as the best run of the major banks, and the Danish pharmaceutical company Novo Nordisk, which dominates the insulin market, and seems well positioned to benefit from the global diabetes epidemic.
To finish with a flourish, it recommends Utilitywise, an Aim-listed company that helps businesses to cut their energy costs. It’s a speculative choice, but one well suited to the concerns of our times.
It strikes me that, with quantitative easing now a fading tailwind for the market, the easy money has been made from this rally. That may lead you to be somewhat more circumspect with your stockmarket bets in 2014.
• Tim Price is director of investment at PFP Wealth Management. He also writes The Price Report newsletter.
What they’re tipping for the year ahead
Shares magazine
Amerisur Resources (AMER)
Aim
The Colombian oil producer should generate lots of news flow this year. Production could jump significantly if a potential new export route into Ecuador pays off.
• Price tipped: 51.5p
• 52 week high/low: 63.5p/34.5p*
Braemar Shipping (BMS)
Transportation
Shipping broker Braemar could benefit from the improving global economy. Diversification into technical services should also help to protect its earnings.
• Price tipped: 562p
• 52 week high/low: 575p/356.25p
Daily Mail & General Trust (DMGT)
Media
The strengthening global economy should boost DMGT’s information and events arms, while the listing of property website Zoopla may also help. MailOnline is still growing too.
• Price tipped: 901p
• 52 week high/low: 981p/557.5p
Kier Group (KIE)
Construction & materials
Synergies from this construction group’s acquisition of May Gurney continue to feed through, while Kier itself is a logical play on any building-sector recovery.
• Price tipped: 1,842p
• 52 week high/low: 1,860p/1,126p
Lloyds Banking (LLOY)
Banks
Lloyds could reinstate its dividend in 2014 if the regulator agrees – generating a 3% yield. Profits are recovering, but watch out for the government’s large stock holding.
• Price tipped: 76.5p
• 52 week high/low: 81.5p/46p
WM Morrison (MRW)
Food & drug retailers
A re-rating could be on the cards if this supermarket chain can win back market share. The firm starts its online venture with Ocado this month and the shares yield 5%.
• Price tipped: 261p
• 52 week high/low: 312p/247.5p
Northbridge Ind. Services (NBI)
Aim
The backup-power testing specialist should benefit as the growing reliance of big companies on cloud computing puts increasing pressure on data centres.
• Price tipped: 465p
• 52 week high/low: 495p/233.5p
Prudential (PRU)
Life insurance
Strong Asian exposure and a recovering UK market mean this insurer deserves its premium rating. Profits in America are recovering and demand in Asia is up.
• Price tipped: 1,273p
• 52 week high/low: 1,363p/889p
Renew (RNWH)
Aim
Renew is enjoying strong demand in the nuclear sector and should win more rail contracts next year. Buy on a price/earnings (p/e) ratio of 9.5 for 2015.
• Price tipped: 170.5p
• 52 week high/low: 182.75p/84p
Restore (RST)
Aim
Restore looks after documents for lawyers and insurers and is growing through acquisition. It hiked its interim dividend by 50% and has a p/e of just ten.
• Price tipped: 126p
• 52 week high/low: 157p/100p
Seeing Machines (SEE)
Aim
Landing a partnership with Caterpillar has vindicated Seeing Machines’ driver fatigue facial recognition technology. Revenues should double in the next two years.
• Price tipped: 9.5p
• 52 week high/low: 10p/1.5p
Trinity Mirror (TNI)
Media
The newspaper publisher could see a re-rating if self-help measures and the sale of weather forecasting firm MeteoGroup pay off. The dividend could also return.
• Price tipped: 187p
• 52 week high/low: 209.5p/81.5p
Versarien (VRS)
Aim
The Liverpool University spin-off has developed a way to cut the heat generated by microprocessors in computers. Contract wins could boost its share price.
• Price tipped: 20p
• 52 week high/low: 22.75p/9p
Vertu Motors (VTU)
Aim
Car retailer Vertu is benefiting from the wealth of manufacturers’ finance deals for new cars available in Britain. It is cash rich and consolidating the market. Buy.
• Price tipped: 59p
• 52 week high/low: 62.5p/38p
The Daily Telegraph (Questor column)
Performance last year: down 6.3%
Best tip: Capita + 35%
Worst tip: San Leon Energy -57%
Royal Dutch Shell B (RDSB)
Oil & gas producers
New CEO Ben van Beurden could lift the shares; $30bn of asset sales could see cash returned to shareholders. Buy on a p/e of 9.5.
• Price tipped: 2,280
• 52 week high/low: 2,374p/2,069p
Bellway (BWY)
House builder
Sales of this builder’s houses are up, as are prices. Profit margins are set to rise to 15%. The p/e of 12.2 is the lowest in the sector.
• Price tipped: 1,570p
• 52 week high/low: 1,610p/1,025p
GlaxoSmithKline (GSK)
Pharmaceuticals & biotech
The drugs giant is ideal for income-seekers: it is set to make £5bn in free cash flow this year and offers a 5.2% yield.
• Price tipped: 1,611.5p
• 52 week high/low: 2,076p/1,556.5p
Volkswagen (Berlin: VOW)
Automobiles
Volkswagen, behind Audi and Porsche, is very profitable. While European growth is weak, growth should come from China. Buy.
• Price tipped: €197
• 52 week high/low: €197/€133
Hyder Consulting (HYC)
Support services
The engineering consultant’s order book is worth £438m. With exposure to Asia and the Middle East, it’s a likely takeover target.
• Price tipped: 635p
• 52 week high/low: 655p/410p
CSR Technology (CSR)
Hardware
If wearable devices such as Google Glasses take off, the chipmaker could benefit as these use its Bluetooth technology. Buy.
• Price tipped: 632p
• 52 week high/low: 645p/343p
Daily Mail
Performance last year: down 6.9%
Best tip: DS Smith +60%
Worst tip: RSM Tenon -100%
Amec (AMEC)
Oil equipment services
Amec could be a major player in Britain’s plans to build new nuclear power plants. Its shares have room for growth.
• Price tipped: 1,079p
• 52 week high/low: 1,210p/961p
SeaEnergy (SEA)
Aim
The oil services firm has disappointed, but with clients such as BP and Total it should make a profit this year.
• Price tipped: 30.5p
• 52 week high/low: 36p/19.5p
Berkeley (BKG)
House builders
Low interest rates and Help to Buy should underpin the housebuilders into 2014. Berkeley’s London focus should help it outperform its peers.
• Price tipped: 2,553p
• 52 week high/low: 2,658p/1,742p
The Sunday Times
Performance last year: +17.2%
Best tip: InfraStrata +41%
Worst tip: Chemring -1.5%
Essentra (ESNT)
Support services
This British manufacturer of items from cigarette filters to oil pipe caps was turned around in 2013 by new CEO Colin Day. There may be more to come.
• Price tipped: 867p
• 52 week high/low: 888p/539.5p
Aviva (AV)
Insurance
Ditching underperforming businesses and managers helped Aviva’s shares climb 20% last year. The eurozone recovery should further boost business.
• Price tipped: 443p
• 52 week high/low: 832.5p/292.5p
RIT Capital Part. (RCP)
Investment trust
This investment trust underperformed last year and trades at a 7.4% discount. Over a third of its assets are in America, which may keep rising this year.
• Price tipped: 1,273p
• 52 week high/low: 1,300p/1,126p
Lavendon Group (LVD)
Construction
Recovering British construction should help this leaser of cranes and aerial platforms. Opportunities in the Middle East outweigh concerns in Europe.
• Price tipped: 182.5p
• 52 week high/low: 197.5p/143p
National Express (NEX)
Transport
Shares in this public transport provider rose 35% in 2013. Falling fuel prices and possible deals with ScotRail and Crossrail could see growth continue.
• Price tipped: 280p
• 52 week high/low: 289p/189p
Rightster (RSTR)
Software
Rightster helps Warner Bros and other firms broadcast via the internet. It is loss-making and has YouTube to contend with, but the market is growing fast.
• Price tipped: 49.5p
• 52 week high/low: 72p/42p
Conviviality Retail (CVR)
Retailer
Conviviality’s famed Bargain Booze chain sells beer and cider cheaper than the supermarkets, and the franchise is set to expand out of the northwest.
• Price tipped: 177.5p
• 52 week high/low: 183.5p/100p
Berkeley Group (BKG)
Housebuilder
London’s booming luxury property market helped this housebuilder’s shares triple over five years. With Far Eastern sales continuing, it still looks attractive.
• Price tipped: 2,658p
• 52 week high/low: 2,709p/1,742p
Circle Oil (COP)
Aim
Unusually for a small explorer, Circle generates cash, mostly from its Egyptian wells. Plans for new wells in Morocco and Tunisia sound promising.
• Price tipped: 21.5p
• 52 week high/low: 22p/15p
The Independent
Performance last year: up 55%
Best tip: Thomas Cook +248%
Worst tip: Anglo/Am -36%
Ladbrokes (LAD)
Travel & leisure
With three profit warnings, 2013 was a washout for the betting firm. But 2014 is a World Cup year and it has also launched on mobile, working with Playtech.
• Price tipped: 179p
• 52 week high/low: 245p/165.5p
Man Group (EMG)
Financial services
Shares in the hedge-fund manager fell last year, but expect a better performance this year as the new CEO and his team cut costs and stage a turnaround.
• Price tipped: 85p
• 52 week high/low: 136p/76.5p
Genus (GNS)
Pharma & biotech
Prospects for the bull semen producer look brighter as more people around the globe are eating meat. Meat prices are up, while feed prices are falling.
• Price tipped: 1,297p
• 52 week high/low: 1,609p/1,178p
Good Energy (GOOD)
Aim
The renewable energy supplier had a stellar 2013, with shares up 50%. Further growth looks likely this year after a backlash against the big six energy firms.
• Price tipped: 229p
• 52 week high/low: 290p/116p
Fusionex (FXI)
Aim
Fusionex has been “winning business like crazy” with its business intelligence software and broker Panmure is swooning over its prospects. Buy.
• Price tipped: 385p
• 52 week high/low: 398p/212p
Severn Trent (SVT)
Utilities
Last summer a consortium thought the water company was worth £21 a share.
At these levels it looks interesting, and new CEO Liv Garfield is well regarded.
• Price tipped: 1,705p
• 52 week high/low: 2,200p/1,536p
Babcock Intl (BAB)
Support services
Government outsourcer Babcock should be a safe bet. Expect it to pick up more work from scandal-hit rival Serco and more business from the government.
• Price tipped: 1,355p
• 52 week high/low: 1,376p/986p
IG Group (IGG)
Financial services
The spread-betting firm’s punters tend to trade more as the economy improves. It offers a near-4% yield and a reasonable price/earnings (p/e) ratio of 15.6.
• Price tipped: 616p
• 52 week high/low: 632p/441.5p
Intl Cons’d Airlines (IAG)
Travel & leisure
Willie Walsh has successfully cut costs at Iberia and the global recovery should help boost BA and Vueling, although fuel-price hikes could result in headwinds.
• Price tipped: 401.5p
• 52 week high/low: 410.5p/190.5p
Royal Dutch Shell (RDSB)
Oil & gas producers
Tuck away some Shell shares. The oil giant’s shares boast a 5% yield, while the firm also has lots of cash to snap up any possible acquisition targets.
• Price tipped: 2,280p
• 52 week high/low: 2,374p/2,069p
The Times
Performance last year: +55.5%
Best tip: Thomas Cook +251%
Worst tip: Glencore Xstrata -11.6%
Royal Bank Scot. (RBS)
Banks
A good play on the broader UK economy, the shares will benefit from any rise in interest rates, real or anticipated – assuming there are no new scandals.
• Price tipped: 343p
• 52 week high/low: 265p/387.5p
President Energy (PPC)
Aim
This oil explorer operates in Paraguay. It is run by an experienced team, and has US giant Schlumberger on board. Test drilling starts in 2014.
• Price tipped: 34p
• 52 week high/low: 37p/14.5p
Anite (AIE)
Software services
This company sells testing equipment for new telecom networks and handsets. Customers “turned off the taps in summer”, but the market is huge.
• Price tipped: 106p
• 52 week high/low: 163p/72.5p
Kazakhmys (KAZ)
Mining
The copper miner is a real gamble – a punt on the price of copper. But most of its problems of the past year seem to be behind it.
• Price tipped: 210p
• 52 week high/low: 833p/188p
John Wood (WG)
Oil equipment & services
The share price of this oil-services company has been hit by profit warnings elsewhere in the business. But it looks cheap on a multiple of just over ten.
• Price tipped: 662.5p
• 52 week high/low: 974.5p/642p
Carillion (CLLN)
Support services
This construction group overpaid for energy services group Eaga in 2011, but is picking up some useful contracts and boasts a dividend yield of 5.5%.
• Price tipped: 329.5p
• 52 week high/low: 334.5p/240p
BG Group (BG)
Oil & gas producers
This gas giant delivered on its 2013 plans, and with significant developments to come this year – including a natural gas project in Queensland – it’s a buy.
• Price tipped: 1,297p
• 52 week high/low: 1,309p/1,022p
Speedy Hire (SDY)
Support services
A big investment in its fleet by this plant-hire company is expected to pay off this year as usage rises with the economic recovery.
• Price tipped: 66.5p
• 52 week high/low: 71.5p/37p
Rolls-Royce Holdings (RR)
Aerospace and defence
The booming civil aerospace sector – buoyed by growing emerging-market air travel – will fuel demand for this engineer’s aerospace products.
• Price tipped: 1,271p
• 52 week high/low: 1,292p/884p
Vodafone (VOD)
Mobile Telecoms
Project Spring, a £7bn investment in its network, will improve customer service and pressurise its rivals, many of whom will not be able to match it.
• Price tipped: 234.5
• 52 week high/low: 239.5p/159p
Investors Chronicle
Utilitywise (UTW)
Aim
Utilitywise, which helps companies cut energy costs, is benefiting from the rise in energy prices. Market penetration remains low and the firm is well funded.
• Price tipped: 244p
• 52 week high/low: 263.75p/89p
Wincanton (WIN)
Transportation
The distributor is highly geared to the economic recovery, so analysts think it could generate double-digit earnings growth for many years to come.
• Price tipped: 132p
• 52 week high/low: 139p/43.75p
HSBC (HSBA)
Banks
HSBC is “generating more capital than it knows what to do with”. As such, a return of capital to shareholders looks likely. It’s attractive for income-seekers.
• Price tipped: 656p
• 52 week high/low: 773p/635p
Chesnara (CSN)
Life insurance
Insurer Chesnara boasts a simple business model, a low-cost base, and offers a reliable and generous dividend yield of 6%. It also trades at a discount to its rivals.
• Price tipped: 318p
• 52 week high/low: 318p/185p
Novo Nordisk (DK:NOVOB)
Pharma & biotech
The Danish firm, which dominates the insulin market, should benefit from the global diabetes epidemic. Last year’s share-price fall is a buying opportunity.
• Price tipped: DKK955
• 52 week high/low: DKK1,100/848
Hays (HAS)
Support services
A recovery could be on the cards for the recruiter’s shares. Cost-cutting has put it back in the black and many of its regions are showing improved profits.
• Price tipped: 128p
• 52 week high/low: 128p/78p
Anglo American (AAL)
Mining
It’s been a tough year for Anglo American and its new CEO following cost overruns at iron-ore site Minas Rio. But prospects there have improved and a bid could be likely.
• Price tipped: 1,339p
• 52 week high/low: 2,089p/1,195p
Zambeef (ZAM)
Food producers
The Zambian beef producer has been hit by a profit warning which has left its shares trading at 44% below book value. It’s a contrarian recovery play.
• Price tipped: 35p
• 52 week high/low: 60p/30p
The Guardian
Performance last year: + 11.8%
Best tip: ASOS +145%
Worst tip: Herbalife (sell) +165%
Salamander (SMDR)
Oil & gas producers
Salamander is backed by an experienced team and recently hiked its oil estimates in Thailand. Power demand in Asia, where it is focused, is due to grow strongly.
• Price tipped: 111.75p
• 52 week high/low: 224p/95p
Vodafone (VOD)
Mobile telecoms
Following the sale of the Verizon stake, a bid could come from AT&T. One broker thinks it could pay up to 280p a share, but another bid could be in the offing.
• Price tipped: 237p
• 52 week high/low: 239p/156p
Sportech (SPO)
Travel & leisure
The US gambling sector has been a graveyard for British firms, but Sportech’s prospects could be good. It has licences in 26 states and is worth a punt.
• Price tipped: 81.5p
• 52 week high/low: 119.5p/69p
Wolseley (WOS)
Support services
The recovery in the US and UK construction markets should boost growth at the buildings materials provider. Bolt-on acquisitions are also in the works.
• Price tipped: 3425p
• 52 week high/low: 3490p/2891p
Stryker (NYSE: SYK)
Health
US health giant Stryker, which specialises in hip and knee replacements, boasts 33 years of sales growth. While a p/e of 17 isn’t cheap, it’s a quality company.
• Price tipped: $75.15
• 52 week high/low: $75.55/$55.82
Category: Market updates