Proactive Investors - For investors, the focus in 2024 will be on navigating a year expected to be split into distinct halves. That, at least, is the conclusion of Liberum, the boutique investment bank, in assessing the tactics to deploy over the next 12 months.
In the first half, defensive stocks are predicted to outperform - so those are sectors such as healthcare and food, beverages, and tobacco.
This is attributed to a period of economic slowdown and profit pressures. Companies with characteristics such as low volatility compared to the market (low beta), less debt compared to their equity (low debt-to-equity ratios), and significant earnings in foreign currencies are expected to fare better.
Going defensive
Noteworthy picks in the FTSE 100 include AstraZeneca PLC (LON:AZN), British American Tobacco PLC (LON:BATS), and Smith & Nephew PLC (LON:SN), all belonging to sectors likely to demonstrate resilience in tougher economic times.
In the smaller company categories - the FTSE 250 and small-cap stocks - firms such as Darktrace PLC (LON:DARK), Tate & Lyle PLC (LON:TATE), and Oxford Instruments PLC (LON:OXIG) are highlighted for their potential robust performance against a challenging economic backdrop.
For the latter half of 2024, Liberum's focus shifts to cyclical and value stocks. These are stocks of companies that tend to follow the economic cycle of expansion and contraction but are currently undervalued.
The anticipation of economic acceleration and possible interest rate cuts by central banks positions these stocks for potential rallies.
As such, Liberum's analysis underscores the necessity for active portfolio management throughout 2024.
Hardy perennials
The predicted stock market volatility and the division of the year into two distinct phases warrant a flexible and vigilant investment approach.
Additionally, there are companies expected to perform well throughout the entire year, such as British American Tobacco and London Stock Exchange Group PLC (LON:LSEG) in the FTSE 100 and TP ICAP (LON:NXGN) and PZ Cussons (LON:PZC) in the FTSE 250.
These businesses are noted for their international earnings, conservative financial structure, and attractive valuation compared to their worth before the pandemic.