FTSE 100 stock tips for 2010 (part 2)
Finding good investments will be tougher in 2010 than during 2009's stock market rally, so where are the experts putting their cash? We round up their stock tips
Better days: We ask the experts what stocks they are favouring in 2010
In the second in our series, (read part one here), we gather tips for 2009 from investment experts.
Our tipsters are Jonathan Jackson, head of equities, at broker Killik & Co, UBS AG, analyst, Caroline Winckles and Richard Hunter, head of equities, at Hargreaves La
This is Money expert share tips
BP
BP currently yields 5.5% and has a projected yield of 5.9% with recent third quarter results obliterating market forecasts. The recent developments at the group have contributed to rising output and greater production even though pressures on refining margins remain.
Hunter says: 'Against this backdrop the company is continuing to drive down costs and overall is in rather better shape than it has been in the recent past.'
BP is also one of UBS's most preferred stocks. Winckles adds: 'BP's high dividend yield make the stock an attractive holding, in our view, especially given its earnings growth potential linked to higher oil prices.'
GlaxoSmithKline
The three-pronged strategy put in place last year by CEO Andrew Witty – to diversify the business, deliver more products and simplify the operating model – remains on track, notes Jackson. He adds: 'The group has more than 30 products in development, while a strong balance sheet provides flexibility to make bolt-on acquisitions and pay a progressive dividend.'
Home Retail Group
Argos and Homebase owner Home Retail is Hunter's wildcard choice, he admits that for a company so obviously linked to the fortunes of the UK consumer it will clearly face challenges. He says: 'Nonetheless with the market being a discounting mechanism attempting always to look ahead, cyclical stocks such as Home Retail could benefit from any mark ups as the year progresses. Its current yield of 4.8% is both supportive and attractive in the current interest rate environment.'
HSBC
HSBC, one of the world's largest commercial banks, has ridden the financial storm better than many of its contemporaries. It stands out for UBS because of its healthy liquidity and capital position, its global presence and good longer-term growth prospects.
It has no strategic constraints owing to an absence of state aid, which gives it a competitive advantage, enabling it to generate superior growth says Winckles. She says: 'The group also intends to continue paying dividends, which is encouraging. Strategically, HSBC is focusing on building a strong Asian franchise, which should support growth; while economic conditions in the developed markets, such as the US and UK start to recover.'
Imperial Tobacco
The tobacco business has proved resilient to the economic downturn, with strong pricing power and a broad portfolio of brands says Jackson. He adds: 'The integration of the £11.3bn Altadis acquisition is progressing better than expected and the group is on track to achieve €400m of benefits by the end of the 2012 financial year. Strong cash generation is reducing the group's debt and financing a progressive dividend.'
Man Group
The world's largest listed hedge fund has witnessed its stock gain almost 30% in the past year. The stabilisation in funds under management is encouraging and the recent interim results came in ahead of expectations, notes Jackson. He adds: 'Man has a strong balance sheet, with net cash and a number of stakes in other fund management companies. The recently-launched onshore funds should drive further fund inflows and the potential for a recovery in performance fees from next year supports the investment case.'
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