t the start of each year our business team pick the share they think is destined for success in the next 12 months.
After outperforming in recent years, 2020 was, admittedly, a year to forget as our bias towards stocks which had been through tough times in 2019 failed to pay off.
Far from recovering, Covid-19 meant the likes of Ted Baker, Centrica and BT were knocked even further off course.
This year, like many investors, we dust ourselves off with hopes of better to come.
And, in the interests of humility, sounded out the office cat to see if he could do better…
The winner by far of our tips for 2020, Lucy tipped the star performer Fresnillo, which returned a stunning 90.4%, so gains pride of place in this selection.
I’m backing NatEx as a punt on travel recovery – but a limited one. More ‘taking a coach up the M40 to Birmingham to visit a vaccinated granny for the first time in a year‘ than ‘jab and go’ to Magaluf as Ryanair’s new ad campaign callously pitches. National Express is down 48% since the start of 2019, but it’s well-run with a new boss and international arms in the US and Europe that spread the risk. I’m hoping jumping on board this investment doesn’t leave me feeling coach sick in a year’s time.
The bookie always wins, the old motto goes. While I was going to tip a flutter on Flutter due to its potential takeover target status, I’ve picked another type of bookie — a Lloyd’s of London insurer.
Lancashire Holdings has a fine record as a disciplined underwriter of commercial insurance risks and 2021 is the year premiums are finally rising. January is renewal time at Lloyd’s and other, non-quoted, brokers say it’s going pretty well despite the economic turmoil. Shares have had a big run-up since November but I’m hoping there’s more to come.
Work from home won’t last for all of 2021. When the rules relax, plenty of staff and firms will rush back to desks in offices. But latent caution should play in IWG’s favour. The FTSE 250 serviced offices giant should benefit as bosses seek temporary space and meeting rooms. Monthly, weekly and even daily lettings would appeal to firms not keen on long leases.
IWG raised £320 million in May for acquisitions, with founder Mark Dixon buying shares worth £91.3 million. He clearly has confidence in IWG, so this could be worth a punt.
My punt for last year did so well I am going to pick it again. One Savings Bank looked good a year ago, and looks even better now. Britain’s obsession with houses is unlikely to dampen any time soon. Lower interest rates and cheap Government funding for loans mean costs are falling, while assets are rising. When the end of the world doesn’t happen, all bank shares should rally as they recoup money set aside for “bad” loans that went good.
If renewed confidence post-vaccine leads to the return of buy-to-let, OSB is poised to take advantage. It is already about 10% of all UK buy-to-let deals — it knows what it is doing.
After 2020’s share-price boom in all things feel-good and sustainable, those prepared to dive back into battered value stocks that can turn a profit will be rewarded. The harder they fell, the quicker they’ll pick back up — and none fell harder than British Airways owner IAG. After a £2.5 billion equity raise late last year, it’s solvent, sensible and still a third of its pre-Covid price.
Recovery in aviation will mean a return to long-haul flights and hours in the non-EU immigration queue — but a healthy take-off in the share price will cushion the blow.
A growing proportion of the UK has been ordering doorstep wine delivery for 10 months. Will we really go back to paying the same for a less enjoyable bottle from a supermarket shelf? AIM-listed Naked Wines sells bottles from independent producers at below supermarket prices, and has tapped a new US audience where sales grew from 5% to 20%. The firm is aiming for sustained growth, has a strong cash position, has more than doubled its global warehouse capacity and reported revenues up 80% to £157 million in the last half-year. It’s worth raising a glass to its future.
AIM-listed Silence is getting noticed by investors on both sides of the Atlantic thanks to its technology aimed at “silencing” the expression of disease-causing genes. The west London firm’s prospects and cash position were transformed by collaborations with AstraZeneca and Mallinckrodt Pharmaceuticals, both major shareholders.
Silence listed its US depositary shares on Nasdaq and now has a New York-based CEO in industry veteran Mark Rothera. Investors will hope for a repeat of Orchard Therapeutics, which Rothera took from UK minnow to a Nasdaq-listed gene therapy firm worth $1.7 billion at its peak.
There are few things the property market enjoys more than a lockdown, it seems. Months of staring at their own tatty four walls in spring gave many owners and renters the spur to finally seek out pastures new. With the sector allowed to carry on almost as normal in this year’s “stay at home” spell the market should be equally lively. Pent-up demand has yet to be fully released and the stamp duty holiday could well be extended.
Shares in London’s top estate agency Foxtons rose from a low of 31.55p in March to today’s opening price of 50.2p. But there is still plenty of value in a stock that traded at 95p as recently as February and almost £4 at the peak of the London property boom.
Ludovic, the office cat
I realise I was asked to join this contest so I would pick a silly share to make the humans look smart. Having seen their selections there is little chance of that. The only share to buy in a pandemic that has exposed the sad weakness of the human race is Pets At Home.
The stock has had a great run this year as our lonely humans pampered us. But it remains a clever firm and the shares have further to go. For a start it doesn’t sell actual cats, or dogs, I assume for the very sensible reason that we live too long. It prefers hamsters, rabbits, ensuring turnover of inventory. Guinea pigs also work. Think of them like a mobile phone, obsolescence is built into the design.