Five large cap stocks I would buy now for capital growth despite market volatility
By Chris Bailey of Financial Orbit | Sunday 14 October 2018
Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Well what a last week with fear - for once in recent years - in ascendancy and lots of 'worst week since February' statistics being quoted. As Tom Winnifrith noted in a recent bearcast the big honking issue is debt around the world, although tactically you can throw in a supporting cast of world trade angst, a bit of inflation bubbling up and a firm US dollar.
But life goes on. I have spent a lot of time in recent days talking with various people about the markets. The reality is with markets is that the game is never over and whilst prudence, diversification, some cash on the side and related are clearly attributes you should always have driving your portfolio choices, there is always something to do. Nigel's dividend munchers list - of which i too have loved-up three of the names mentioned on this website - is testimony to this. You could do a lot worse than considering some of these names for your portfolio.
But we all know the world of BT Group (BT.A), Centrica (CNA) and ITV (ITV) et al may not offer the best capital growth opportunities in large cap land from here, because they are likely to be slightly more dividend-centric. So here are five names to consider that offer a bit more large cap growth oomph, despite the backdrop out there.
The first is Burberry (BRBY) whose new CEO and chief designer recently released their new collection to reasonable acclaim. However, I suggested selling/taking profits three odd months ago in this chavtastic name but now I see the shares are back to the 17 quid odd level I mentioned back then. I see there has been a lot of angst around luxury goods sales in recent weeks for many obvious reasons and so this inevitably requires some faith in future purchasing trends...which brings you squarely back to what is happening in China (a region that soon will account for nearly 40% of Burberry's sales). There are some themes though that you cannot stop and the rise and rise of the Chinese consumer is one of those. My number one UK play on this remains Burberry, for all the reasons i have talked about in previous articles. All you do is wait for share price weakness.
Brexit angst has been central to many share price movements in recent months and in my recent easyJet (EZJ) piece I noted the strange combination of good trading and share price fear - undoubtedly due to fears about what would happen to airlines if current pan-European issues come to the fore. I do not believe in a cliff edge Brexit scenario over upcoming months...and this is one of the best plays on this not occurring. There is growth here, a prudent balance sheet and customer relations somewhat better than a certain big Irish rival...
Sticking with the too much Brexit fear idea, some Bank of England research highlights to me that - unsurprisingly - industrials and financials are two Brexit influenced sectors. Well given the pessimism out there at the moment, the cobbling together of any deal / kick the can down the road scenario, provides opportunities for a share price growth bounceback 'surprise'. I discussed Ibstock and the opportunity from the deficit in bricks here since when the shares have...bricked it, overly rudely in my view. And as for financials...well I like the fact on Lloyds (LLOY) that 'Fund manager Neil Woodford recently removed the retail bank from his Equity Income fund'. Be greedy when others are fearful or when others are forced to sell shares. I talked about the 'geek maths' supporting the share price idea back here and I would snaffle some here
And the final idea? Remember this piece back in March which mentioned Smiths Group (SMIN). The new boss there is continuing to make some interesting changes and activists are a-lurking...
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