Ten stocks that may be safer as markets wobble
Published 17/05/2015 | 02:30
This summer is shaping up to be a volatile one for European stock markets - largely because of uncertainty around the fate of Greece. So the old adage to 'sell in May and stay away' might very well ring true for investors this year.
"The summer is likely to see volatility, driven by bond market jitters and Greece," said Peter Brown, director of education with the Institute of Investing and Financial Trading (IIFT) in Dublin. "Investors need to be careful as we are likely to get some resolution to the Greek situation - either positive or negative. They should stay clear of finance stocks ahead of an outcome for Greece."
The summer is traditionally seen as a time when stock markets are hit by wobbles. Despite this (and the Greek debt crisis), there are usually shares which will buck any slowdown on the market over the summer. The Sunday Independent asked some top investment experts to tell us what stocks they believe are worth snapping up this summer.
Intercontinental Hotels Group
As summer is usually when people head off on holidays, shares in this multinational hotel group should do well over the next few months, says Peter Brown.
The International Hotels Group (ICG), which is behind well-known hotel brands such as the Holiday Inn, Crowne Plaza and Hotel Indigo, is listed on the London Stock Exchange. "ICG is well positioned globally and hotel rates are on the rise," said Brown.
Although you're more likely to see bikers whizzing around on Harley-Davidsons over the summer months, this is not the reason that Aidan Donnelly, senior equity analyst with Davy, believes these shares could be worth buying today.
Rather it is because he believes the company's shares can be picked up for a good price - and that this price will increase by the end of the year. "Few brands inspire loyalty like Harley-Davidson does," said Donnelly.
"Faced with a recent decision to match competitor discounts or cut production, Harley plans to cut production. The decision should support new and used bike prices, protecting the scarcity value of the brand. Given recent share price movements, the stock is now attractively valued and has several catalysts over the coming quarters to drive performance."
Home Retail Group
As long as the sun shines (which it usually does more of in Ireland and Britain during the summer), people tend to spend more on garden furniture and equipment, barbecues, garden pots and planters, children's paddling pools, and DIY.
So the garden centre and DIY store, Homebase - which is owned by Britain's Home Retail Group (HRG) could do well this summer. "Argos, which is also owned by HRG, is also showing decent growth," said David Holohan, head of research with Merrion Capital.
Over the last year, HRG has closed about 30 Homebase stores. In response to digital competition, the company has become more of an internet retailer and revamped the Argos store layout and product offering. "A key British competitor, Kingfisher also recently announced that it will reduce the number of B&Q store space by 15pc - which will have a positive impact for the HRG," said Merrion in its latest investment outlook. "The impact of these decisions are already visible in the group's results."
HRG's profit before tax for the last year has jumped by about a third.
Although it has no connection with summer as such, shares in this US healthcare company, which is listed on the Nasdaq, would be worth snapping up over the next few months, according to Peter Brown. People are living longer and the IIFT likes the health sector," said Brown. Thoratec makes medical devices for heart failure patients.
This international oil and gas company, which is based in France, is another one tipped by Brown. The price of oil, rather than any propensity for this company to do well over the summer, is the reason these shares could perform strongly in the coming months. "We think that oil is under-priced over the medium-term."
Although oil prices fell to less than US$50 a barrel earlier this year, prices have started to recover in recent weeks. Some investment experts expect this recovery to continue. "A move back to the $100 mark cannot be ruled out by the end of 2016 if global demand starts to rise over the next 12 months or so," said Merrion in a recent investment outlook.
Another company which could benefit from a pick up in oil prices is the Royal Dutch Shell Group - more commonly known as Shell.
"We are not saying that the bottom has been reached in the oil price - mostly because we don't know - but we do believe the significant pull back in the share price of Royal Dutch Shell offers investors an attractive entry point with the support of a good, well-covered dividend," said Aidan Donnelly. "Its recently announced plans to acquire BG Group will also be taken positively by the market."
Higher oil prices are usually not good news for airlines - but the summer generally is because it's peak holiday season. Shares in the British no-frills airline, EasyJet, could therefore be worth buying, according to David Holohan. "Travel firms and airlines tend to do well in summer," he says. Shares in the British-American- owned cruise liner, Carnival, could also do well, he added. Carnival Corporation is listed on the NYSE.
Nothing beats cracking open a beer or cider on a hot summer's day and so shares in the London drinks giant, SAB Miller, could do well this summer, says Holohan.
SAB Miller, which is listed on the London Stock Exchange, is behind brands such as Bulmers, Coors Light and Peroni.
Like the other shares tipped by Alan Donnelly, recent events - rather than the summer itself - are likely to push up the performance of Adidas shares in coming months.
"They look to be turning the corner after a difficult 12 months that saw sales impacted by a slowdown in the golf market and the fallout from the Russian Ukraine conflict," says Donnelly. "As the company moves on from these issues, the core strength of its brands should emerge, improving investor sentiment and with it, the share price."
Internet giant Google is another stock worth considering.
"To think of Google as merely an internet search engine misses the huge transformation that the group has undergone in the last decade," says Alan Donnelly. "Google's sites are some of the most visited internet properties in the world, and it also leads the development of the Android mobile operating system. It has an excellent management team. The stock has lagged its global technology peers in terms of share price performance, and should close this gap over time."
Sunday Indo Business