Archive
Five slow but steady winners, Pan African's transformational deal and getting to grips with new risks
With liquidity pumps turned on and flowing freely, 25 EU member states agreeing to tough new fiscal rules, and strong starts to the year in the markets, what could be worrying investors now? Plenty, of course. Deep rooted obstacles to growth would be one of those worries, leaving investors concerned that investments made now could struggle to flourish. But that risk can be dramatically shrunk by buying undervalued shares, and/or companies entering a transformational phase. In our stock screen this week, we've looked for fundamentally sound companies which have been out of the spotlight but have continued to show steady earnings growth during the past few difficult years. If they can do that, they must be doing something right. Attached to these neglected shares, we want forecasts for continued earnings growth at the same level for the next 12 months. Algy Hall has used the approach espoused by the incredibly successful US fund manager John Neff to turn up 5 shares that fit the bill. Meanwhile Martin Li explains how a deal being signed by Pan African Resources should boost its gold output to around 140,000 ounces a year and in the process transform the company's prospects. Lee Wild reports on packaging company RPC, up 90 per cent since our buy tip and recommends what action to take now; while Jonas Crosland offers an update on one of our Tips of the Year which is already showing a gain of 9 per cent. Finally, M&G's bond fund star Richard Woolnough explains to personal finance editor Moira O'Neill why the risks for bond investors have changed.
Undervalued small caps, what to do when gilt prices rise, The Trader and press tips
With no prospect of the political storm over his pay abating, Stephen Hester, chief executive at taxpayer-owned Royal Bank of Scotland, has agreed to give up his 拢1m bonus. Although this victory will inspire those fighting excessive pay and rewards for failure in the City, don't expect too many others to lay down their bonuses. Some City bosses might be swallowing hard as they ponder whether their own bonuses could attract similar publicity but it'll be a fleeting worry: they'll gain strength from the fact that they are employed in the private sector. With regard to RBS or any other bank shares, the whole bonus issue is irrelevant. What matters for bank share prices are the weak UK economy, the sentiment problem for all banks arising from the Eurozone crisis and capital adequacy and regulatory changes. Meanwhile, in the small cap arena, our companies editor Simon Thompson has noted some heavy director share buying in several of the undervalued companies that he follows and he explains why he thinks it's well worth following their lead. Chris Dillow, our economics writer, has been looking at the effect of momentum in gilts (following on from a recent piece on momentum in currencies) and finds that here too past gains can lead to future ones - but should you always jump aboard when gilt prices start rising? We've also got our usual round-up of press tips and The Trader gives his view on market movements.
Beating inflation, dogs of the FT30 and tips summary
Inflation is falling, right? The effect of last year's VAT rise is dropping out the calculation and energy prices are coming down. Inflation is something we don't need to worry about as much in 2012 as we did in 2011. To a degree, that's all true - but what about all this money-printing that's been going on? We're likely to get another dose of QE in the UK next month, the Fed might crank up the presses again and the ECB is lending billions to Europe's banks against only the flimsiest collateral. And you can bet that sooner or later, western governments are going to deal with their huge debts in the time-honoured fashion - by inflating them away. It's too soon to write inflation's obituary. So Algy Hall has come up with five ways to make sure your portfolio keeps pace, ranging from gold to what he terms 'paranoid fund managers' - the ones who harbour deep fears about the world economy and have positioned their assets accordingly. We also take a look at the 'dogs of the FT30' strategy - and if you're wondering what the FT30 is, it's all explained. I compare the hoo-ha about executive pay with the lack of a hoo-ha about other forms of 'excessive' pay, and we've our usual summary of share tips and updates. Looking at some company results from this week, we like what's going on at self-storage group Safestore, but a profit warning from Misys means its shares are a weak hold at best. Finally, please note that the 果冻传媒 site will be down for around three hours on Saturday morning - from 9am until noon - while we do some maintenance.
Why shares are rising, plus miners, a share yielding 10% and buy-to-let latest
An old stock market adage has it that January is a good pointer for the rest of the year. If the market rises in January, it'll finish the year higher. On that basis, we're in for a good year, because the FTSE100 has had its best start to a year since 1989. That seems a bit odd, given all the economic and political doom and gloom. But there's a simple reason for it: the European Central Bank is flooding the market with liquidity. This is not quantitative easing in the way the Fed or the Bank of England did it. Instead, the ECB is lending European banks huge amounts of money and accepting practically anything as collateral. John Ficenec describes the process, while Dominic Picarda looks at its effect on global indices and Chris Dillow ponders whether the Bank of England will restart quantitative easing here at its next meeting. All this largesse will, of course, keep interest rates very low - even before Fed chairman Ben Bernanke's promise to keep rates on the floor into 2014 - so it's worth knowing that you can still get decent yields in some corners of the market - like our featured bond, where a 拢6,500 investment will throw off almost 拢6,000 in interest alone over the next eight years or so. Another good source of yield lately has been the buy-to-let market, but Stephen Wilmot wonders if rents can rise much more. Finally, Martin Li looks at the prospects for big mining shares and finds little to derail the long-term growth story.
Alternative energy, carbon scams, solar storms and Mr Bearbull
Alternative energy is a maddening sector. Instinctively, we all know it must be a good idea. The world cannot continue burning carbon-based fossil fuel forever - either the fuel will run out, or we'll choke the planet with the fumes. Nuclear power - for half a century, the only viable alternative - comes with a stack of other problems. The idea of harnessing the wind, the waves and the sun to generate electricity and use it more efficiently has huge appeal. And governments have, until recently at least, been throwing money at it. So companies involved in that sector must be coining it, right? No. Last year was a terrible one for alternative energy shares. And although many are trading at discounts to their assets, it's still tricky to know who will prosper. That's true of any emerging technology or market - a huge number of start-ups don't make it, and the industry ends up dominated by a few titans. It happened with tech stocks in the 20th century (Apple - one of the eventual winners - reported record quarterly results yesterday. They'll be on our home page later today) and railways in the 19th, and it'll happen with alternative energy, too. Graeme Davies looks at the Alternative Investment Market's green brigade to see who's got what it takes. One area of alternative energy where profits are being generated is carbon scams, with smooth-talking salesmen promising big returns from investing in carbon credits. Leonora Walters identifies the warning signs. Elsewhere, Mr Bearbull has been casting his eye - and his dividend discount model - over Vodafone's shares. He urgently needs to plug a hole in his income portfolio - does the mobile operator cut the mustard? Stargazers may have marvelled at the Northern Lights this week, but there's plenty of evidence to suggest that such magnetic activity is bad for moods and therefore markets.