US Edition Questor expects continuing, unpredictable volatility in currency markets. This means that diversification into global businesses is essential. Companies with resilient earnings and long-term contracts are also vital additions to your portfolio. This is important from a dividend point of view, as Questor expects many companies to slash their payouts.
Companies with strong balance sheets and cash in the bank should also be at the top of any investment list.
However, there is the possibility that the global economy may show some green shoots of recovery towards the end of 2009. Investors need to be ready for this. For this reason the last two of these recommendations represent a greater risk – but also offer a greater potential reward.
Diversification
Bunzl
606p
Bunzl sources and distributes a range of products for the cleaning, catering, retail and food processing industries such as food packaging, disposable tableware, builders' hard hats and carrier bags. The group operates in 22 countries worldwide, so it has a diverse geographical spread.
Historically, the shares have traded on a forward earnings multiple of between 10 and 16 times and the shares are currently at the bottom of this range, trading on a December 2009 multiple of 10.9 times. This implies that the shares are cheap.
However, the current market is far from normal. Earnings estimates for many businesses are likely to come down next year, so in order to be truly cheap, its earnings will have to be pretty resilient.
A total of 75pc of company earnings come from sectors that should be fairly robust, such as disposables for healthcare, cleaning and hygiene.
The shares are yielding 3.6pc – and the dividend is covered around 2½ times by earnings so it looks pretty secure. With a market-leading position in resilient markets, Bunzl has the ability to grow, despite the recession.
Safety
BG Group
£10
On A December 2008 multiple of 10.8 times, it could be argued that shares in BG Group are trading at a high valuation already. However, Questor believes that the company offers a relatively safe home for your cash.
There is lots of talk about falling North Sea gas production, but the group's operations in this area are expected to be flat or better all the way to 2015. The company is also involved in the largest hydrocarbon discovery in the world for 30 years.
BG has a 30pc stake in the Carioca field, which was found offshore Brazil. It could contain up to 33bn barrels of oil equivalent. News flow from this location should support the share price throughout 2009 – with drilling news expected in the first quarter of the year.
BG is also one heavily involved in liquified natural gas (LNG) projects. Its operations are not tied into long-term contracts and so the company can divert its ships to markets where they can obtain a premium. In the third quarter of 2008, 65pc of LNG cargos were diverted to premium markets.
Despite the difficult market backdrop, BG Group presence in LNG and offshore Brazil means it is operating in growth markets and Questor feels an investment is fairly secure.
Safety
Rolls-Royce
344¾p
Rolls-Royce is a manufacturer of turbine engines and propulsion systems (as shown above). The shares were hit in the latter part of last year as investors fretted about the state of the airline industry.
However, the thing to remember about Rolls-Royce is that it makes a substantial amount of turnover on long-term service contracts. This aftermarket gives the company robust revenues – and its installed base is growing.
Rolls-Royce is the UK's largest exporter – and the recent weakening of the pound has provided it with a competitive advantage, although the group will not see the full benefit of changes in the currency markets until 2010 because it has currency hedges in place.
The company should have ended 2008 with a net cash position. This is due partly to the steps management has taken to de-risk its pension scheme by removing significant exposure to equities.
Dividend
Primary Health Properties
299p
Secure long-term revenues and an attractive dividend yield means that Primary Health Properties shares are the 2009 dividend play.
Its shares have been dragged down in line with the rest of the property sector, but the thing to remember about PHP is that its rents are not just secure for 2009 – but for many years to come.
The group is one of the largest providers of primary healthcare properties in the UK. It builds and owns GP surgeries, pharmacies and other healthcare facilities across the country. The shares are currently yielding an impressive 5.6pc.
Questor feels this payout is secure because the average length of its leases is now approaching 20 years. A total of 91pc of its revenues are derived from government-linked agencies, primarily the NHS. About 83pc of revenues are secure for 15 years or more. The value of its property will be written down, but this looks to be factored into the share price already.
Growth
Centamin Egypt
42.5p
In times of trouble, gold has always been a safe haven because its stores value. One ounce of the metal could buy you a decent suit in the time of Henry VIII, and the same is true in 2009.
However, from a UK-based investor's point of view, gold is now expensive. This is due to the fall in the pound against the dollar, which propelled the gold price to all-time highs in sterling terms in December.
Questor believes gold is still an attractive investment but, because of movements in the currency markets, UK investors need to find another way to play the gold price.
Centamin Egypt is expected to become a gold producer in the second quarter of 2009 from its site at Sukari in Egypt. It is an Australian company listed in London. The most important thing is that Centamin is fully funded to production and has no debt. Sukari contains a resource of more than 12m ounces of gold – and possibly much more.
Questor thinks that the upside from buying shares in this near producer will be a better way to play the gold price than buying the highly-rated metal.
De-leveraging
Templeton Emerging Markets Investment Trust
284p
Emerging markets had a torrid time in 2008. Investors sold assets perceived as risky and the Chinese market fell 62pc, India fell 53pc and Indonesia fell 51pc.
However, Questor believes that emerging markets shares will recover faster than UK stocks once the global economic situation starts to improve. This choice is a play on de-leveraging. As the appetite for risk improves, so will the valuation of emerging market shares.
The fund, which is managed by Dr Mark Mobius, recently made it into the 20 most consistent investment trusts as determined by Association of Investment Companies. It has fallen 41pc over the last 12 months, but is still showing gains of 8pc over three years and 93pc over five years.
Of course there is greater risk with this investment than with UK companies. These markets can be volatile and, in a time of crisis, they are hit harder than more established markets. However, the potential upside is also greater.
This fund trades on the LSE and is bought as normal through your broker.