What Fleet Street's tipsters are buying now

By Tim Price Jan 09, 2009

Tim Price

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Every year Fleet Street's finest tip their top stocks for the New Year. Tim Price reviews last year's crop, and takes a look at their picks for 2009. Which portfolios does he like the look of?

As I suggested this time last year, 2008 was primed to be a market that favoured stock tippers over index trackers, and where "avoiding losses" would be "as important as the prospect of making capital gains". I got that last part right at least. But how did the nation's tipsters fare? To use the words of Emperor Hirohito addressing his people after the bombing of Hiroshima and Nagasaki, the market situation in 2008 "did not necessarily develop to the advantage" of financial journalists.

The Daily Telegraph's Questor column did best; its stock recommendations lost on average 26%. (After dividends, the FTSE All-Share lost 29.6%. So Questor can fall back on the perennial fund manager's claim of having outperformed the market.) Their best tips delivered a positive return: software firm Coda (+17% before it was taken over in March) and Compass Group (a respectable 15%). But elsewhere on Fleet Street it was largely a tale of wholesale defeat.

The Independent's portfolio racked up a return of -36%, and they outperformed everybody else, including Tempus at The Times (-38%), The Sunday Times (-42%), The Guardian (-44%) and Questor's stablemates at The Sunday Telegraph, who picked up the wooden spoon with a loss of 45%. So beware financial journalists bearing gifts.

But the New Year is a time for new beginnings, so we will suspend our disbelief and carry an open mind into 2009. What do the pundits tip now? I like the look of Investors Chronicle's Bullish Portfolio, not least because it includes HSBC (my favourite bank) and BHP Billiton (my favourite miner; I own both stocks). But I like their Bearish Portfolio even more. Since we're only just slipping into recession, it seems a little early to focus on growth, and their more defensive tips include drugs giants GlaxoSmithKline and AstraZeneca, tobacco monster British American Tobacco (a personal holding), and my favourite drinks business, Diageo.

What does last year's winner, Questor at The Daily Telegraph, favour for 2009? Rated sectors include support services (Bunzl), oil and gas (BG Group), and aerospace (Rolls-Royce). As a closet gold bug, I'm intrigued by their choice of Centamin Egypt, an Aim-listed gold miner. And I think they're onto something with Templeton Emerging Markets, which is a one-stop shop for investing in the higher growth prospects of the developing world. At a handy discount of around 8% to net asset value, Templeton offers better recovery and long-term growth potential than many of the West's bombed-out sectors.

But in light of last year's staggering stockmarket losses, the final word should go to Chris Dillow of Investors Chronicle. As he says in his own post mortem on 2008's grim returns from various strategies, market risk is ubiquitous, and no basket of stocks can reliably avoid it. In that sense, asset allocation – the question of how many shares to hold, relative to other assets such as bonds or commodities – matters much more than the question of stock-picking.

My New Year's wish? That next year, financial journalists will spend more time discussing asset allocation and less time blithely tipping stocks. There is more to the investor's life than just the stock-market, and it is about time that the financial press woke up to the fact.

• Tim Price is director of investment at PFP Wealth Management. He also writes The Price Report newsletter

The Sunday Telegraph

Performance last year: down 45%
Best: Ultra Electronics -18%; Savills -20%
Worst: Yell -89%; Punch Taverns -92%

Aberdeen Asset Mgt (ADN) General financial 
Boasting little debt, the fund manager looks promising after both Credit Suisse and Mitsubishi UFJ gave their blessing by taking big stakes in it. It trades on nine times earnings and pays a 4.5% yield.  
Price tipped: 126p
52-week high/low: 155p/80p

Barclays (BARC) Banks
Down 70% in 2008, this bank is in pole position for recovery as it will not have to focus on the gloomy domestic market like its part-nationalised rivals. Expect a dividend in the second half of the year. 
Price tipped: 157p
52-week high/low: 506p/128p

BP (BP) Oil & gas producers 
With a net yield of 5.8% that is well covered by earnings, this oil company looks attractive and it is also well placed to ride any recovery in the oil price. It's now trading on a p/e of seven.  
Price tipped: 553p
52-week high/low: 650p/376p

British Airways (BAY) Travel & leisure  
With an impregnable position at Heathrow and debt of just £1bn, the airline should be "flying higher" by the end of 2009, especially if it can pull off a tie up with both Iberia and American Airlines.   
Price tipped: 180p
52-week high/low: 337p/105p

C&C Group (CCR) Overseas listing 
The cider maker went from "hero to zero" in 2008. But the new CEO, former Scottish & Newcastle chief John Dunsmore, is the right man to push through the changes needed to reverse its fortunes 
Price tipped: € 1.45
52-week high/low: €5.60/€1.00

Croda (CRDA) Chemicals 
On a probable dividend yield of 4%, this chemicals manufacturer is a good defensive bet as it is very cash generative, with free cash flow jumping 132% to £63.9m in the first half of 2008. 
Price tipped: 559p
52-week high/low: 724p/375p

Land Securities (LAND) Real estate 
Trading at a near 43% discount to net asset value, this property company is the pick of the sector. Even though substantial equity fund-raisings are likely, in the medium-term these have been good for the sector.  
Price tipped: 949p
52-week high/low: 1,798p/854p

Premier Foods (PFD) Food producers 
The maker of Hovis and Mr Kipling cakes is a risky bet if it goes ahead with a dilutive capital raising. But balance sheet aside, it is well run and it has a stable of quality brands that consumers will flock to. 
Price tipped: 33p
52-week high/low: 200p/16p

Shares magazine

Ad. Medical Solutions (AMS) Aim  
This bandage company is part of the advanced wound-care market, which is growing at around 11% a year. Growing demand means profits "should soar to over £4m in 2010". The p/e of 14 represents growth prospects.
Price tipped: 34p
52-week high/low: 37p/21p

Aero Inventory (AI) Aim 
The downturn could be good news for this firm as airlines may cut costs by outsourcing parts procurement to the group. Profits surged 60% last year to $73.1m and should rise again this year. A "great-value stock". 
Price tipped: 220p 
52-week high/low: 655p/178p

Albemarle & Bond (ABM) Aim 
The country's largest pawnbroker "should be a major beneficiary of changes in the economy". The demise of other sub-prime lenders is good news for the company and sales of unredeemed jewellery are expected to rise. 
Price tipped: 192p 
52-week high/low: 241p/146p

Autonomy Corporation (AU) Software/computer services 
This software firm helps companies meet regulatory requirements. It should prove a defensive play as the amount of regulation increases during the recession. A p/e of 17.3 is "racy" but fair due to "robust organic growth". 
Price tipped: 876p 
52-week high/low: 1,215p/704p

Consort Medical (CSRT) Health care equip't & services 
Shares in this medical devices firm are good value on a forward p/e of 8.4. It is a cash-generative business with good growth prospects, partly fuelled by overseas expansion in one of its divisions. 
Price tipped: 371p 
52-week high/low: 639p/322p

Home Retail Group (HOME) General retailers 
A "cast-iron balance sheet" gives this retailer a sound footing while trading remains tough. A lot of bad news is already priced into the shares, meaning that it may not take much for the stock to see upside.
Price tipped: 221p 
52-week high/low: 312p/156p

Omega Insurance (OIH) Aim 
This non-life insurer "looks well placed to benefit from rising premiums". A "conservative strategy" on underwriting and investing provides investors with "protection against any potential downside". The shares yield 8%. 
Price tipped: 149p 
52-week high/low: 174p/128p

OMG (OMG) Aim 
This cash-rich group, which is the leading specialist in motion capture technology, has just reported a fourth year of record revenue growth, up 34% to £26.2m. The firm remains debt-free with £2.9m cash.
Price tipped: 26p 
52-week high/low: 62p/22p

Serco (SRP) Support services 
A £15.1bn order book means that this support services firm offers high earnings quality and good earnings visibility. The shares look expensive on a 2009 pe of 15.9, but its predictable earnings make it a buy. 
Price tipped: 414p 
52-week high/low: 496p/317p

Tesco (TSCO) Food & drug retailers 
A strong overseas business that is still growing, combined with its dominant position in the UK market make this supermarket a buy, despite the tough retail conditions. It is "clearly a survivor of any economic downturn". 
Price tipped: 327p 
52-week high/low: 473p/284p

The Sunday Times

Performance last year: down 41.7%
Best: Filtronic +5.4%; Glaxo +0.3%
Worst: Galiform -83.4%; Aricom -90%

Standard Chartered (STAN) Banks
With its finances boosted by last November's £1.8bn rights issue, underpinning the all-important tier one capital ratio, this bank should benefit from renewed attention on Far East growth and takeover speculation.
Price Tipped: 870p
52-week high/low: 1,666p/582p

Babcock International (BAB) Support Services
This engineering group should receive more credit for its defensive qualities as most of its work comes from government contracts with little likelihood of immediate cancellation.
Price Tipped: 500p
52-week high/low: 650p/306p

BG Group (BG) Oil & Gas Producers
This integrated global gas company has built up a strong portfolio of global projects and has financial strength with net funds of £471m. It's sensitive to oil-price volatility but an attractive takeover target.
Price Tipped: 1,000p
52-week high/low: 1,934p/664p

Autonomy (AU) Software & computer services
Having reclaimed its FTSE 100 place in 2008, this data-sorting group should prosper in 2009 on the back of the litigation boom sparked by the banking collapse. A forecast p/e of 16 makes this a good time to buy.
Price Tipped: 1,000p
52-week high/low: 1,215p/704p

ICAP (IAP) General financial
The world's biggest broker of government bonds is likely to benefit from huge sovereign debt issuance this year. The £240m debt pile is under control and house broker Citigroup sees a 27% price bounce.
Price Tipped: 298p
52-week high/low: 719p/197p

Compass (CPG) Travel & leisure
This contract caterer could benefit from the downturn as more firms cut costs by outsourcing their catering. Despite the p/e of 16, now has "a leaner, more focused operation", and there's more to come.
Price Tipped: 353p
52-week high/low: 396p/236p

Silence Therapeutics (SLN) AIM
Shunned by the market over fears that its £5.7m cash reserves are inadequate, this biotech business believes it has pipeline deals that will boost funding, and has support from Astra Zeneca and Pfizer.
Price Tipped: 19p
52-week high/low: 78p/12p

Croda International (CRDA) Chemicals
Capitalised at £760m, this high-end cosmetic manufacturer has genuine growth potential this year and next, with pre-tax profits expected to rise more than 60%. On a forward p/e of nine the shares offer value.
Price Tipped: 559p
52-week high/low: 724p/375p

Carphone Warehouse (CPW) General Retailers
Having fallen 70% in 2008, the communications company is practically debt-free after selling a 50% stake in its retail business. The p/e is 8.4 and "analysts see upside from a break up of broadband division Talk Talk".
Price Tipped: 95p
52-week high/low: 346p/83p

The Daily Telegraph

Performance last year: down 25.8%. 
Best: Coda +17%; Compass Group +11.3%
Worst: Faroe Petroleum -68%, Hammerson -47.8%

Bunzl (BNZL) Support Services
Sourcing and distributing products to robust sectors such as healthcare, cleaning and food processing, this market-leading company is "pretty secure" and cheap on a p/e of 10.9.
Price Tipped: 606p
52-week high/low: 757p/500p

BG Group (BG) Oil & gas producers
Despite falling production in the North Sea, this gas group's 30% stake in the 33 billion-barrel Carioca oil field in Brazil, and its involvement in LNG, make it a "relatively safe home for your cash"
Price Tipped: 1,000p
52-week high/low: 1,394p/664p

Rolls-Royce (RR) Aerospace & defence
The state of the airline industry has scared off investors, but this engine manufacturer has a slew of long-term contracts and as the UK's largest exporter, will benefit from a weak pound.
Price Tipped: 345p
52-week high/low: 517p/244p

Primary Health Properties (PHP) Real estate
The property market might have tanked, but this healthcare property owner's leases are secured for 20 years and 91% of revenues come from government-linked agencies. It yields a tasty 5.6%.
Price Tipped: 299p
52-week high/low: 326p/237p

Centamin Egypt (CEY) AIM
This gold producer's site at Sukari in Egypt has more than 12 million ounces of gold and will soon be up and running. The weak pound means this is "a better way to play gold than buying the metal".
Price Tipped: 43p
52-week high/low: 78p/22p

Templeton Emerging Markets (TEM) Equity investment instruments
Emerging markets will recover more rapidly than UK stocks. This UK-listed fund fell 41% last year, but it's still up 93% over five years. It's riskier than a UK play, but "the potential upside is greater".
Price Tipped: 284p
52-week high/low: 467p/208p

The Times

Performance last year: down 37.8%. 
Best: Capita Group +3.8%; Smith Group -11.3%
Worst: Asset Co -73.9%; Johnston Press -95%

BAE Systems (BA) Aerospace & defence
The world's third biggest arms contractor boasts a £40bn order book. It's net debt of £250m is less than one third of annual cash flow. Earnings growth should hit the high single digits. 
Price Tipped: 377p 
52-week high/low: 507p/303p

BHP Billiton (BLT) Mining
Having walked away from the Rio Tinto deal, this is the "best large-cap miner" with low production and net debt, not to mention its diversified portfolio of long-life assets, including exposure to oil.
Price Tipped: 1,294p 
52-week high/low: 2,196p/753p

Salamander Energy (SMDR) Oil & gas producers
A pure play on an oil price recovery, this explorer's 2009 drilling program is fully funded, while its current production of 13,000 barrels per day generates strong cash flow.
Price Tipped: 125p 
52-week high/low: 356p/77p

Babcock International (BAB) Support services
This engineering services contractor enjoys a £5bn order book and a heavily public-sector client list. It is well diversified for a downturn with interests in nuclear, rail and power generation.
Price Tipped: 474p 
52-week high/low: 648p/349p

Balfour Beatty (BBY) Construction & materials
This construction firm is well placed to take advantage of accelerated public works schemes in the UK and America. The forward order book is £12bn and it has a cash cushion of £200m. 
Price Tipped: 329p 
52-week high/low: 484p/224p

Brit Insurance (BRE) Non-life insurance
Lloyds Underwriters "are on a different cycle" to the rest of the financial world. This one's shares fell just 4% last year. AIG's woes and hurricane hits will keep premiums and profits heading higher.
Price Tipped: 220p 
52-week high/low: 263p/148p

Paypoint (PAY) Support services
This over-the-counter cash payment network should "take recession in its stride". Bill settlement for utilities and telecoms can still grow as customers "make smaller but more frequent payments".
Price Tipped: 500p 
52-week high/low: 670p/425p

Rank Group (RNK) Travel & leisure
This bingo and casino operator should see earnings rise for the first time in five years after a tough time after the smoking ban. The price will also be supported by prospective bidders. A "contrarian" buy.
Price Tipped: 68p 
52-week high/low: 101p/50p

Advanced Computer Software (ASW)
Buying this small tech stock, which provides software for primary healthcare, is a straight bet on serial entrepreneur Vin Murria, who has a "knack of creating shareholder value".
Price Tipped: 18p 
52-week high/low: 23p/15p

Futura Medical (FUM) AIM
This pharma group is primarily a play on treatments for erectile disfunction. Its lead product is a condom with an erectogenic compound and it boasts SSL – maker of Durex –- as a sales partner.
Price Tipped: 30p 
52-week high/low: 52p/12p

The Guardian

Performance last year: down 44%. 
Best: GlaxoSmithKline +0.5%; Mothercare -2.5%
Worst: EnCore Oil - 82%; Albidon - 95%

ASOS (ASC) AIM
This online retailer "stands out from the crowd", with a track record of huge sales growth and plans to go international. The share price has come back a long way from its near-400p peak in the summer.
Price Tipped: 247.5p 
52-week high/low: 420p/196p

Autonomy Corporation (AU) Software/computer services
Up 7% last year, this software maker recently reported that profits had more than doubled to $53.7m. It can count on big customers. such as Vodafone and government defence and intelligence agencies.
Price Tipped: 951p 
52-week high/low: 1,215p/704p

BP (BP) Oil & gas producers
The oil major's strong dividend yield is likely to be protected by cuts in capital expenditure, while it can also boast an "ultra-strong" balance sheet and decent management.
Price Tipped: 526p
52-week high/low: 657p/370p

Centrica (CNA) Gas, water & multiutilities
With gas bills rising and no windfall tax on profits on the horizon, this electricity provider "has got to be a good bet" at 266p. What's more, utilities tend to perform well during recessions.
Price Tipped: 266p 
52-week high/low: 312p/203p

GlaxoSmithKline (GSK) Pharmaceuticals & biotechnology 
Relying on governments and not consumers for sales of its products, this drug maker should outperform the market again in 2009, helped by the fact that it has a cost-cutting plan in place.
Price Tipped: 1,285p 
52-week high/low: 1,385p/995p

ITV (ITV) Media
With most of Britain now switched over to digital TV, the decline in audience share could be over for the broadcaster, which uniquely for a commercial entity can still draw big audiences.
Price Tipped: 40p
52-week high/low: 80p/25p

Mitchells & Butlers (MAB) Travel & leisure
Serving both food and drink, and boasting the best-located pubs in the country, this company is best placed to take market share. Down 60% in 2008, its biggest shareholders are snapping up shares.
Price Tipped: 160p 
52-week high/low: 490p/118p

Monitise (MONI) AIM
Shares in the mobile banking service provider are at a "pitiful" 3p from 22p in 2007, even as it moves towards break even in 2010. It could be snapped up by a mobile phone company now that it's so cheap.
Price Tipped: 3p
52-week high/low: 17p/3p

National Grid (NG) Gas, water & multiutilities
In times of low interest rates and economic uncertainty, the gas and electricity provider is appealing given its mix of businesses in the US and UK, and its pledge of a "secure, progressive dividend policy."
Price Tipped: 684p
52-week high/low: 867p/532p

St Mowden Properties (SMP) Real Estate
Full-year results are likely to be dismal for this property company. But with rental income up and its shares on an unprecedented 60% discount to forecast net asset value, it is a long-term story.
Price Tipped: 118p 
52-week high/low: 540p/68

Investors Chronicle (Bearish Portfolio)

GlaxoSmithKline (GSK) Pharmaceuticals & biotechnology
Compared to its competitors this pharmaceutical giant is in a "good position to handle the current environment of expiring patents on existing drugs, as well as pricing pressure from generic competition".
Price Tipped: 1,244p 
52-week high/low: 1,385p/995p

AstraZeneca (AZN) Pharmaceuticals & biotechnology
This drug firm's "thin pipeline of prospective drugs" is a risk worth taking, as cash flow is good with sales up 9% in the second quarter to $7.96bn. "We continue to be confident about its growth in the medium term".
Price Tipped: 2,736p 
52-week high/low: 2,888p/1,748p

Pennon (PNN) Gas, water & multiutilities
This water utility firm's financing is "flush compared with competitors", making it one of IC's favourites. It has signed a further £100m facility with the European Investment Bank, which will boost existing facilities.
Price Tipped: 471p 
52-week high/low: 695p/426p

British American Tobacco (BATS) Tobacco
This tobacco firm's growth in Asia, South America and Eastern Europe is not going to stop anytime soon, despite the global slowdown. "The resilience of the group's sales in difficult times cannot be underestimated."
Price Tipped: 1,740p 
52-week high/low: 2,049p/1,450p

Diageo (DGE) Beverages 
As the producer of premium spirit labels such as Johnnie Walker whisky and Smirnoff vodka, this drinks company "is proving to be the toast of the emerging middle classes in the giant Chinese economy".
Price Tipped: 948p 
52-week high/low: 1,081p/794p

Investors Chronicle (Bullish Portfolio)

HSBC (HSBA) Banks
Forget the bank's £1bn exposure to the Madoff hedge fund and you'll see that it "has managed the credit crisis better than most of its competitors". It is now bucking the trend by increasing its lending to home owners.
Price Tipped: 613p 
52-week high/low: 928p/612p

Prudential (PRU) Life insurance
Asia is the place to be if you're optimistic about the world's growth prospects, That makes this insurer a good bet, as it has a strong capital position and healthy businesses in America, Britain and Asia. 
Price Tipped: 377p 
52-week high/low: 726p/245p

BHP Billiton (BLT) Mining
The failure of this miner's bid to take over Rio Tinto is good news as it was "overambitious at the very least" Its position as a dominant player in various commodities puts it in a prime position for any recovery.
Price Tipped: 1,235p 
52-week high/low: 2,196p/753p

Antofagasta (ANTO) Mining
"Our favourite play in the mining sector" is this Chile-based copper miner, which has a $2bn cash pile, even after major expansion. Any bounce in the copper price "is a predictor of the end of the bear market". 
Price Tipped: 391p 
52-week high/low: 851p/274p

Next (NXT) General retailers
This retailer is entering a tough period due to weak consumer demand and pessure on margins, but it "has the ability to capture market share" in these conditions by providing credit where "others cannot".
Price Tipped: 1,110p 
52-week high/low: 1,522p/838p

The Independent

Performance last year: down 36%. 
Best: Proximagen Neuro +31.9%; Shire -11.7%
Worst: Phorm Inc -85%; International Ferro Metals -87%

Mitchells & Butlers (MAB) Travel & leisure
After a tough year, this pubs group has axed its dividend as it looks to cut borrowing. But while the jury's out on whether pubs have further to fall, a mix of restructuring and big-name investors offers upside.
Price Tipped: 169p 
52-week high/low: 473p/128p

BHP Billiton (BLT) Mining
"Bombed out last year", this commodity producer has much less debt than Rio Tinto and the pressure on its price should ease with the merger's collapse. If demand returns, "investors should pick up a few bob".
Price Tipped: 1,294p 
52-week high/low: 2,196p/753p

Yamana Gold (YAU) Mining
Though not a pure gold play – there's also copper exposure – this producer has underperformed heavily "and we expect an upside". Strong cash flow and steady production from advanced projects should help.
Price Tipped: 516p 
52-week high/low: 990p/218p

Falkland Oil & Gas (FOGL) Aim
Better placed than most smaller oil companies, Falkland is on track to start drilling at the end of 2009. An announcement that partner BHP Billiton has secured a rig would be a further share price catalyst.
Price Tipped: 67p 
52-week high/low: 165p/53p

Bodycote (BOY) Industrial engineering
One company benefiting from sterling weakness is this engineer specialising in heat treatment and metal coatings. "Maybe Switzerland's Sulzer might be tempted" to mount another takeover.
Price Tipped: 123p 
52-week high/low: 261p/99p

Vectura (VEC) Pharmaceuticals & biotechnology
This biotech business actually makes money through licensing deals with some of the pharmaceutical giants. As more products move into the final testing stage, "investors can expect hefty revenue growth".
Price Tipped: 51p 
52-week high/low: 62p/35p

Royal Bank of Scotland (RBS) Banks
New chief executive Stephen Hester is the right man to strip back Sir Fred Goodwin's empire. Having fallen 87% last year, surely now "the only way is up" for the shares, though they are "very high risk". 
Price Tipped: 49p 
52-week high/low: 350p/41p

Begbies Traynor (BEG) AIM
One of the few safe bets this year is that companies operating in the financial sector will have to restructure. That means that this distressed debt advisory boutique is about to come into its own.
Price Tipped: 140p 
52-week high/low: 200p/98p

Goldman Sachs (GS) Overseas listing
The deadliest predator on Wall Street is "hardly in trouble", yet it is trading below its book value. When the tide turns for investment banking, it will be "among the pace setters" once more. 
Price Tipped: $84.39 
52-week high/low: $207.78/$52

Taylor Wimpey (TW) Household goods
A punt on this, the worst-performing housebuilder last year – "which is no mean feat" – could pay off handsomely, assuming that the group can work out a deal with its lenders in February.
Price Tipped: 14p 
52-week high/low: 205p/4p

Published in Tips & advice | More articles by Tim Price

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