The transition between calendar years is typically when people stop, take stock, look forward and project. Financial commentators are no different, and, though the year is only a couple of days old, we’re already being flooded by a bewildering array of investment tips that are supposedly going to prove themselves as winners in the twelve months ahead.
Here we take you through five of the shares being touted by the experts and weigh up their credentials for you should you wish to buy them online.
Vodafone had a big year in 2013. Their share price rose by 50% and is now higher than it has been for over a decade. This is partly down to the group having sold a massive asset – a 45% stake in the US telecoms company Verizon Wireless – for a whopping $130 billion. This historic deal is going to end up showering shareholders in cash, with quite a large portion of the funds being paid out in eagerly awaited dividends.
Obviously, such a big move brings with it some uncertainties. One thing you should expect is for the share price to go down once the dividend has been paid, as is normal. After this point, it remains to be seen just what the future holds, but those backing Vodafone as a good bet are largely doing so on the basis that, having been slimmed down, it will be more attractive to an American firm looking to move into Europe, with AT&T being the name bandied about.
A takeover bid would push up share prices significantly, especially if a bidding war ensues. Some think that Japanese firm, Softbank, may also be interested.
Of course, this is just speculation, but then even rumours of a takeover can cause jumps in price. As ever, you do need to look at the potential downsides. Whilst the cash from the Verizon sale is very nice for existing shareholders, it takes away some growth potential. The company is now also more tightly bound to the fortunes of Europe, which could also be seen as a negative.
Last year saw a lot of attention from the press toward the construction market, and, whilst the upturn over here was marginal, it was more pronounced over the pond. This trend should benefit the building materials firm Wolseley. It’s protected its profitability through difficult times and may do much better now that economic conditions are turning in favour of the sector.
The group have traditionally used a strategy of using bolt on acquisitions to drive their growth. They didn’t manage to find too many attractive targets last year, which one might assume would make them more likely to aggressively seek out more opportunities in 2014. Indeed, it’s been reported that they currently have seven or eight possibilities all ready lined up.
There are also signs from within that management are feeling confident about the company’s fortunes. They recently introduced an annual dividend policy, for example. This requires long term planning to budget for and can be taken as a sign of assured stability. Their balance sheet also looks pretty good, with debt levels nice and low.
Detractors can point to a recent track record of low yields and a very high price to earnings ratio as reasons to stay away, but if you like the outlook for construction in 2014, they could be your chance to benefit from it.
Mobile banking looks like it will only get bigger as smartphones and tablets become more affordable and people become more comfortable with the ease and convenience that banking apps offer. As such these apps are big business and Monetise provide the technology behind a range of mobile banking apps, including, amongst others, the offerings available from Lloyds, Natwest and HSBC.
On the downside, the company, being relatively new, has yet to turn a profit and, as many like minded people see the potential inherent in their position, the share price has already gone up a fair bit, meaning if you want to sit back and wait to assess the company’s direction you may miss out on a bargain as other speculators swoop and push the price into regions where it could start to look less attractive.
Last year, giving their position on the group, Goldman Sachs said that a projection of 50% year on year growth could be viewed as “conservative” – a good indicator that more rapid expansion could well be on the cards.
On the surface it seems a bit odd that one of the best performing shares of 2013 would make the list of tips for 2014. As stated above, once a good thing becomes obvious it loses a bit of its value. Thomas Cook is a blindingly obvious performer with the price having shot up 250% over the course of the last 12 months. Simply based on these staggering figures you might assume the stock has nowhere else to go, but that could be a case of not seeing the wood for the trees.
Consumer confidence is on the up as the recovery seems to be gaining traction, unemployment is falling and interest rates are still low whilst inflation is calming down a little. All of these things stand to work in favour of the holiday giant. They have further cost cutting measures to come that will improve profitability further, they are developing their online arm and, even as things stand, most people would call the price to earnings ratio relatively low.
Another one you might look to for exposure to construction is Barratt’s, the house builders. The government is doing its best to stimulate the property market, notably through Help to buy and other first time buyer schemes. In the view of some, these schemes make property look like a bad investment, with fears of a bubble taking off the shine. Others are less sceptical, believing that the policies will only help. Where you stand on this issue will likely determine your stance on Barratt’s. The share price rose 64pc last year and could be set to continue on the up.
This article does not constitute any form of professional financial advice – the value of shares can rise and it can fall and it is the duty of the investor to make an informed decision of their own. FinanceNet.org will not be held liable for any changes in share value or any losses should they arise.