Proactive Investors - This selection of stock picks and fund choices is the fourth annual Christmas tipping competition, with 15 investment morsels to unwrap.
It’s a friendly contest to see whose share or investment fund rises highest in 2024 – will anyone beat the blockbuster 214% gain of this year’s winner?
The most recent medal positions were won with a tech megacap, an airline and a Japan fund, while previous winners were an inverse ETF and an AIM minnow, coming in ahead of a UK mid-cap and a uranium miner.
For the 2024 contestants we’ll go in alphabetical order for the tips.
Bango PLC (AIM:BGO, OTCQX:BGOPF) – Andrew Hore, editor of the AIM Journal
Tip price: 191.38p
That means we start with our 2021 winner, who ended up in last place for 2023 and is currently laid up in bed with Covid/flu. Get well soon Andrew!
From his sickbed he says he has chosen payment services provider Bango PLC (AIM:BGO, OTCQX:BGOPF) as it is “well-placed to take advantage of the move to bundling of subscriptions and services by telecom companies, which use this to retain customers and attract new ones”.
Bango has developed the Digital Vending Machine (DVM) to enable these extended bundling services.
“The bundles can be launched more quickly using the DVM, which has a SaaS-based model,” Andrew explains.
Bango reported a first-half loss due to integration costs, with analysts at Singer expecting a rebound to a US$3.4 million pre-tax profit this year, indicating a much-improved second half.
“It could move to a pre-tax profit of $17m for 2024. That may prove optimistic, but profit is on an upward trend,” he concludes.
Barratt Developments (LON:BDEV) – Danni Hewson, AJ Bell
Tip price: 563.2p
Danni, who finished safely in mid-table the past two years, sees potential for the “doom and gloom” of the UK housing market to be lifted next year. She notes that despite the blistering series of rate hikes, house prices have been surprisingly resilient.
“With the Bank of England tipped to start cutting rates from the middle of the year and mortgage costs already coming down the picture for 2024 is an improving one for developers,” she says, also pointing to easing inflation as a “key factor”.
“Even more important is the anticipated focus on housing from politicians of all colours in the run up to a general election. From streamlining the planning process to new moves to help first time buyers, everything is likely to be on the table as voters are wooed.
“Barratt has cut its cloth wisely over the past year and investors have responded with shares up almost 40% since the start of the year but nowhere near pre-Covid highs.”
Barratt Developments – Victoria Scholar, head of investment at Interactive Investor
Tip price: 563.2p
You may have noticed an apparent glitch in the Xmas tips matrix, but no (would you Adam and Eve it?!) we do have the unusual quirk that two of our contestants have chosen the same company.
Victoria’s rationale is of course similar: Housebuilder headwinds in 2023, including build cost inflation, squeezed mortgage affordability, waning customer demand, yadda yadda, but inflation is coming down, Bank of England expected to cut rates, could provide a more favourable outlook.
“With Barratt's shares bouncing off the lows since October, upward momentum appears to be gathering pace. At the same time, the stock is still trading around 40% below its pre-covid highs. It trades on a price-to-earnings ratio of around 10 which is roughly the middle of the road for the sector,” she says.
What’s more, even after trimming the dividend, it still offers an attractive yield of 6.4%, she says, “particularly enticing during a period of elevated bond yields and stock market uncertainty amid the shaky economic backdrop”.
Also Victoria highlights net cash of £1.1 billion and a pause on new land investment in favour of a more selective approach, cost control, targeted incentives and growing focus on sales to the private- rental and social housing sectors.
BlackRock iShares Bitcoin Trust ETF – William Farrington, Proactive Investors
Tip price: ?
The winner from 2023, by a long chalk, my colleague Billy, is next. Over to the golden arm, or finger or whatever, who is now so cocky that he’s picking things than don’t even exist.
“You’ve probably heard that bitcoin was on a rip in 2023, and I believe the catalysts are in place for another solid year ahead for the only cryptocurrency that truly matters,” the Aussie axolotl expert opines.
“But picking bitcoin would be a) a cop-out and b) boring. So I’ve gone with something far riskier: a product that doesn’t even exist yet, namely BlackRock Inc (NYSE:NYSE:BLK)’s proposed spot-bitcoin exchange-traded fund (ETF).”
Tentatively called the ‘BlackRock iShares Bitcoin Trust ETF’, he acknowledges that is has yet to be approved by the US regulators, but says “my hunch is that it will in 2024. If it does in fact win approval, I expect to see it rally in line with bitcoin. We’ll see!”
Chrysalis Investments fund – Darius McDermott, managing director at Chelsea Financial Services
Tip price: 77.35p
Darius says this pick was made in light of his “track record over the last two years in this competition [7th and then 10th] and the difficulty of predicting what is going to happen over a 12-month period”.
The Chrysalis Investments fund, he says, “is our highest conviction holding across our four investment funds, on which we are the investment adviser”.
Chrysalis invest in and supports innovative businesses with the potential to disrupt and transform huge addressable markets, he notes.
“The fund itself is controversial given its recent volatility. It is trading at a heavy discount – around 50%.
“The fund holds a number of private companies that may IPO in the coming years – and if they do we, there is potential for substantial upside.”
Compass Group (LON:CPG) – Chris Beauchamp, chief market analyst at IG
Tip price: 2,114p
Chris, who has been fourth twice and then 8th in the past year’s competition, has gone for the FTSE 100-listed catering giant.
Our chorister firm has struggled thanks to fears of a widespread downturn. But with the outlook brightening perhaps it’s time for investors to find themselves being pointed in the direction of the shares [too many puns?]. At 21 times forward earnings it remains close to the low valuation of 2022, and remains well below the five-year average. Having recorded an annualised return of over 10% since the end of 2013, the prospects for Compass shares are looking brighter.
Energy Select Sector SPDR Fund (XLE (NYSE:XLE)) – Neil Wilson, chief market analyst Markets.com
Tip price: 84.46p
Our winner from 2022 with a mid-table finish this time, the firebrand Scot is one of several this year opting for the energy sector.
He’s also going for US exposure via the XLE fund.
“I think oil has good defensive qualities if things go bad and crude prices have declined about a third this year and the market could rebalance next year to support pricing,” he says.
And then added: “XLETSGOOOO!”
Equinox Gold (TSX:EQX) – Vince Stanzione, financial trader, trainer and author of The Millionaire Dropout
Tip price: 5.05p
Vince, a longtime contributor to this competition, including in previous iterations, was second and fifth in the 2021 and 2022 standings before his last year’s misfired.
For 2024 he has gone for Equinox Gold (TSX:EQX), which at the start of December was up around 70% since the start of the year.
“I expect the shares to have another great year,” he says. “Unlike many junior mining stocks, it actually has operating mines and makes money.”
As well as mines in ‘relatively’ safe jurisdictions of Canada, USA, Mexico and Brazil, he says, the company has “strong management with mining veteran Ross Beaty owning 8.2% of the company. Its Greenstone mine in Ontario is on track to open in the second half of 2024 and will be one of Canada’s largest gold mines.”
Future PLC (LSE:LON:FUTR) – Oliver Haill, Proactive Investors
Tip price: 759p
Your correspondent is going for a more risky pick than last year’s life insurance choice which bagged me place just outside the final medal positions for the past year’s contest. This publishing company is a neighbour of mine in the city of Bath, Future.
This year, shares in the owner of Go.Compare and publisher of Marie Claire, TechRadar, Guitar World, Cycling News and many more have nudged five-year lows, down more than 80% from their peak, as first-half profits were hit by a declining audience and a recent update revealed a misfiring US business.
Even more so, the shares have been knocked by the rise in AI. As people ask ChatGPT rather than Google (NASDAQ:GOOGL), this could mean many fewer people visit Future’s website, the theory goes.
My bet (and hope as a member of the media industry) is that the audience decline in the past year is temporary, though it may not be that 2024 proves my theory correct if the economy remains in a downswing. I like a recovery punt – though my investment record would argue that I’m mostly wrong.
Harbour Energy (LON:HBR) - Mark Crouch, analyst at eToro
Tip price: 302.5p
Mark replaces analyst colleague Sam North, who finished second last time and has moved onto podcasting now.
He says it is “no secret” to his regular readers that he is bullish on oil in the long term, “so it seems only right that I should hang my hat on an oil and gas company”.
Harbour Energy impresses him mainly due to its balance sheet, which “tells a story of a prudent, well run company” – though the share price might tell a different story, falling by more than 50% in just over 12 months.
This fall can be attributed to the UK government's policy of increasing the tax rate for oil and gas companies operating in the UK, though, Mark says, “which is going to be hard to stomach whatever industry you are in. However, price is one thing and value is something else.”
Since merging with Premier Oil , the company has paid off 90% of the debt that came with that merger, which makes it fairly rare in the sector, while also repurchasing around 17% of its stock and introducing a steadily increasing dividend.
“To top it off, the company is on track to generate $1 billion of free cash flow in 2023, versus a market cap of only US$1.7 billion.
“Much of Harbour's short term success will invariably hinge on the oil price, but with a CEO in Linda Cooke with three decades' experience in the industry, the long term future looks bright, and the numbers would certainly suggest that.”
Pfizer Inc (NYSE:NYSE:PFE) – Alex Campbell, Freetrade
Tip price: $28.34
Also replacing an analyst colleague, who came in the bottom half last year, is the first director of communications to ply their stock picking ability in our contest (Ed: first and last, please!).
He picks a stock that recently scraped what are decade lows.
His argument goes as follows: “The darling of pandemic era over-earning, Pfizer’s stock has taken a beating in 2023, as revenue from its Covid-19 jab and treatment have fallen. We’re not all getting our annual booster anymore, and this has meant its year over year revenues and earnings look anaemic.
“But it’s worth looking beyond Covid-19 to a deep and growing pipeline of treatments that are in market or will soon be coming to market. There’s also the acquisition of genetic medicine-specialist, Seagen, worth an estimated US$10 billion in revenue by 2030.”
This means non-Covid-related revenues are expected to grow in the high single digits and add up to US$45 billion in revenue from new drug launches and acquisitions.
“That would top the high water mark for revenue set in the midst the pandemic when hundreds of millions of people paid for a Pfizer-manufactured vaccine. With the share price sinking to a 10-year low, about half the level it was eighteen months ago, but with a steadily growing dividend meaning the stock currently yields nearly 6%, this giant of the pharmaceutical industry is worth a good look for 2024,” he concludes.
Premier Miton US Opportunities Fund - Emma Deuchars, investment manager at investment platform Bestinvest
Tip price: 410.1p
Newcomer Emma, a former gymnast and instructor her LinkedIn tells me, says she choosing “a steady performer” in the US equity space for her debut.
This choice is “to reflect strength within the US market and the broadening of The Magnificent Seven rally as seen earlier in 2023”.
The fund’s multi-cap approach to stock selection, she says, “helps investors seek long term capital growth within the sector, whilst investing further than the traditionally dominant US tech companies”.
“The fund strategy focuses on holding quality stocks that can produce consistent cashflows which will compound over time. As well as its standalone strength, the fund can often act as a good compliment to other US holdings.”
Schroder Global Recovery fund – Peter Sleep, senior investment manager at 7IM
Tip price: 107p
Sleep by name but wide awake when it comes to picks for this contest, being a double medal finisher and fifth for the past year.
This Schroder fund, run by Simon Adler and team, is “an unabashed value fund or a contrarian fund that buys cheap, out of favour stocks”, he explains.
The fund’s performance suffered in the period 2017-2021, when growth companies were all the rage, but he noted that the team “stuck to their knitting and the fund came roaring back in 2022 and 2023”.
“You won’t find Tesla or Nvidia in this fund, but among its top 10 stocks are familiar but neglected stocks like Standard Chartered (LON:STAN) Bank, Intel (NASDAQ:INTC) and Molson Coors.”
Smith & Nephew (SN.) – Peter Higgins, host of the Investing Matters podcast and owner of the TwinPetesInvesting podcast
Tip price: 1,071p
This Peter, better known on X as @conkers3, was second in 2022 and in the “disaaaster darling” category this past year, says he is “hoping the third CEO in four years will be the lucky charm” for this FTSE 100 medtech company.
“His restructuring plan and strategy to ensure the three global business units optimise efficiencies, supply chains, enhance margins and maximise profitability could start to take shape in 2024.
“If said operating margins and efficiency targets can be achieved, this should drive revenues and therefore profitability, which should lead to a rerating of the shares during 2024,” says Peter.
The recent share price, he reckons, makes them “undervalued versus their peers”.
TUI (LON:TUIT) AG (LSE:TUI) – Chris ‘Wilderness’ of the Financial Wilderness Blog
Tip price: 7.08p
Third place for 2023 with the selection of a Japan fund, Chris has gone for tour operator TUI, which given his predilection for hands-on research means he is likely to be booking a holiday with them in the coming year.
The German group, which is listed on the FTSE 250 but is considering dropping the UK listing, was flying high pre-pandemic before some heavy losses during the virus years forced the company to near quadruple its debt to survive.
“As holidays return, that debt pile is beginning to subside, TUI has returned to profitability and looks attractive at a P/E of c. 9.7 with plenty of earnings growth potential,” he says.
“History shows even in a recessionary environment people still prioritise a holiday, margins in the sector have grown as travel has bounced back and TUI management has actively taken steps to successfully transform from a high-street agent to also having the presence for the online holiday era – hopefully we'll be sipping a cocktail by the pool to celebrate victory this year!”
Tip prices were taken as closing prices on 21 December 2023.