This year's top ten MoneyWeek share tipsters did much better than in 2011.
Last Christmas our best performer, Rahul Sharma (in position five this year), managed a return of just under 14%. This year's top tipster, Alan Le Maistre, has chalked up a much healthier 43% and even our tenth placed tipster, Fraser Mackersie, turned in a respectable 17% this year. That compares with a rise of just over 10% for the FTSE 100 index (as at 18 December).
Our analysis is not scientific: the tips were given at different times of the year, which obviously affects the percentages quoted, and we also take no account of dividend payments in arriving at the total overall returns. Above all, most of the tips were intended as long-term investments, so this is just a snapshot. Here we look at how our tipsters' stocks have performed to date, and ask them for their tips for 2013.
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Ashburton European Equity Team
Despite MorphoSys's strong run in 2012 (up 51% since tipped in January), it's still one of the best European growth stories, says Maistre. It's one of the world's only independent therapeutic antibody firms and an attractive bid target. After a strong year, he'd take profits in Duerr (up 90%), as its core growth markets (notably China) may now struggle. It was a tough year for Golar LNG (down 11%), despite the global liquefied natural gas (LNG) market holding up, but it's worth hanging on to. For 2013, chemical tanker maker Stolt Nielson (OL: SNI) will gain new export opportunities thanks to the US shale gas boom. He also likes glass specialist Saint Gobain (PA: SGO). Margins have troughed, but should recover. The stock trades on a p/e of 13.
BNP Paribas European equities team
AB InBev (up 21% since June) has performed well, but SABMiller (LSE: SAB) looks like a better bet, reckons Hemmant. It trades on similar multiples, but offers better growth prospects through its broad emerging-market exposure. Swatch (up 24%) and Lloyds (up 51%) continue to look well placed. For 2013, he likes Kingfisher (LSE: KGF). The DIY sector has consolidated, especially in Britain, largely thanks to the housing-market downturn. The pricing environment now looks stronger. Poor consumer sentiment has weighed on earnings over the last 12 months and expectations for British and French consumer spending are downbeat. So the stock should benefit from any pick-up in sentiment. Recent initiatives should lift margins and it pays an attractive dividend. Minimal debt limits the downside.
Unicorn Asset Management
Driver Group (up 16% since August), a global construction consultancy, recently announced revenues up 51%, thanks to improved trading in Africa and the Middle East and the acquisition of Trett Consulting, says Chris. Profit before tax rose 243% and the cash position is positive. Tracsis (up 24%), a provider of specialist hardware and software to the transport industry, saw growth driven by new contract wins and strong demand from existing customers in Britain and overseas. Zetar (up 35%) a maker of confectionery and savoury snacks, was bought at 297p per share in October. Another smaller company to consider for 2013 is Hangar 8 (LSE: HGR8), one of Europe's largest operators of privately owned passenger jets. This year saw big progress, with the company winning new aircraft management mandates, expanding its reach and bringing aircraft maintenance in-house. Hangar 8 recently bought a competitor at an attractive valuation.
SVG Investment Managers
4imprint's (up 31% since August) growth continues third-quarter revenue increased by 14%, notes Widdowson. With net cash and a well-covered forward dividend yield of 4.5%, it remains attractive for income. Its rating is undemanding, given 16% forecast earnings growth. BBA Aviation's (up 19%) end markets in North America remain soft and volatile, yet it generates decent free cash flow and is reducing debt. The firm remains undervalued on a yield of 4% for 2013. Daily Mail & General Trust (up 18%) reported strong results and announced the disposal of its challenged UK regional newspaper business. It also announced a £100m share buyback programme. The cash flow multiple is a lowly 8.5, with a yield of 3.5%. Looking ahead, Widdowson likes Vodafone (LSE: VOD). Stripping out its 55% stake in Verizon Wireless, the rest of the business is priced far too low on a yield of 6.5% (excluding the special Verizon dividend).
Sharma still likes Richemont (up 35% since June). Its portfolio of watch and jewellery brands remain popular in Asia. He also likes Volkswagen (up 32%), which is gaining market share across the world. The company is seeing high growth in emerging markets. An edge on quality, as well as strong financing and a rock-solid balance sheet, mean it should continue to perform. For 2013, Williams-Sonoma (NYSE: WSM), the upscale furnishings retailer in America, is one of few retailers managing a successful transition to selling in a multi-media world. More than 40% of sales are now made over the web, its most profitable sales channel. Web growth, struggling competitors and any improvement in the housing market should all drive earnings. The stock trades at 15 times earnings, despite holding over 12% of its market capitalisation in cash.
Royal London European Growth Fund
Wilkinson sold his holding in Grifols (up 109% since April), a pharmaceuticals and chemicals business. He feels the valuation is now stretched, having risen to more than 20 times earnings. He also sold his position in Nokia (down 30%), following a mixed performance from the new Lumia range, which to date has not posed an effective challenge to Apple and Samsung in the smartphone market. He continues to like Subsea 7 (down 11%), an offshore construction, maintenance and repair company that gets oil and gas from the sea bed to the surface. Subsea 7 is the global leader in a market with high barriers to entry. For 2013, he likes Neopost (PA: NEO), a global franking machines and postal equipment firm. Rapid sales growth in 2013 comes with a p/e of just 7.4 and a forward dividend yield of more than 10%.
JOHCM All Europe Dynamic Growth Fund
Swedish radiation therapy firm Elekta (up 20% since June) remains a core holding for Toraasen. It has been growing revenues by targeting existing customers with new and updated products, as well as penetrating new markets. The order book also looks very healthy. Eurofins (up 37%), the French global number one in food and pharmaceutical testing, is still a favourite. Early investment in infrastructure is now being rewarded and its industry is benefiting from increased regulation. The picture at Rolls-Royce (up 7%) remains less clear cut following recent bribery allegations. Toraasen is adopting a wait-and-see approach. For 2013, he likes Norwegian-listed, Aberdeen-based Veripos (OL: VPOS), a company that helps oil drilling vessels accurately identify their offshore position. Its technology also has agricultural uses in driverless tractors and combine harvesters.
Emerging-market consumers, notably the Chinese, should continue to boost demand for luxury goods in 2013. So Longuet will hold onto Richemont (up 38% since February), whose luxury brands and strong pricing power should support earnings momentum and the share price. She likes the look of Coach (NYSE: COH) for 2013, a US luxury brand that has dropped on fears of increased competition (the 2014 p/e is just 12.6). Management is busy sorting out its core US market and the brand is expanding fast in China and non-Japan Asia. She also likes PVH (NYSE: PVH), which owns Calvin Klein.
Matterley Undervalued Assets Fund
Smith Nephew (up 12% since July) recently announced a big acquisition of an America peer a tacit admission of disappointing organic growth, says Dixon. But he still likes the valuation and cash backing offered by Schroders (up 32%) the discount offered by the non-voting shares is worth having. The investment case for Daejan (up 14%) is improving as big development properties become revenue-generating. The steep share-price discount to net assets looks harsh. For 2013 he is drawn to Bank of Georgia (LSE: BGEO), a new entrant in the FTSE 250. The p/e of 4.7 for 2013 is the lowest in the index bar and the discount to its closest peers is significant. A growth rate of around 20% and its solid performance during the financial crisis are attractive.
Unicorn Free Spirit Fund
Iomart (up 36%) and Anite (up 21%) have grown to become the two largest holdings in this fund. Iomart had a strong year in the cloud-computing and hosting market. Operating in a growing market, with big capacity in its data-centre facilities, profits should increase faster than sales, says Mackersie. The 4G technology roll-out has driven the strong performance at Anite and he believes the investment case remains compelling. NCC (down 5%) had a disappointing year, but remains his preferred cyber-security play. For 2013 he likes Lo-Q (LSE: LOQ), supplier of virtual queuing and ticketing technology to theme parks, mostly in North America. The firm will also benefit from the roll-out of 4G technology and growing numbers of smartphone users in North America.
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