Tuesday, 30 December 2014

15 global stocks for 2015

Having shared my 15 Macro Thoughts for '15 yesterday (link here), now it is the turn of some favoured stocks.  So taking into account some of the top-down themes what are my 15 Global Stocks for '15?  In alphabetical order...

Well I had to have at least one energy sector stock, didn't I?  As noted in the macro overview I don't think the oil price is going to recover rapidly so if you are going to buy a name then it has to have other angles...such as asset simplification.  The shares had a horrible end to the year in line with much of the sector but a management team that - as detailed here - is making the company more focused and showing the value inherent in a sub book share price gets my vote...even if it was a name that did not work for me in 2014.

The deal to merge with Friends Life did not excite me initially but picking through the details (as I discuss here) I realised that combining these two inherently quite boring insurance names has material cost-cutting potential.  In a mixed backdrop world such self-help is a real positive.  There's a 3%+ yield to get excited about too.

Following good success with Royal Bank of Scotland during 2014 (I still think there is value there) my attention turns to the next UK mainstream financial simplification story...and that's Barclays.  With the Bank of England stress test passed and a commitment to shrink that underperforming investment bank this out-of-favour institution with strong Barclaycard and African franchises to complement UK retail banking is undervalued.  Here's my most recent write-up.

Coca-Cola Hellenic Bottling
Now we get to the only name I currently don't own. Clearly that is going to change soon.  So as the name suggests CCH has some Greek heritage but its soft drink production/distribution business has a much wider footprint across central and eastern Europe plus the emerging markets. When I add that Russia is also a good sized market, you can get some feel why the shares are kicking around the lows.  So this one is certainly the turnaround Europe play for 2015.  My most recent thoughts here.

Citizens Financial
I name-checked Royal Bank of Scotland and the potential of simplification stories above. Citizens Financial is a spin-out from RBS and looks/feels undervalued with good management improvement scope/self-help.  I last profiled the company here.

General Electric
Another simplification and spin-out story!  Clearly there is a self-help theme ongoing here...  Clearly GE offers cyclical exposures which may or may not be good but what I see is a lowly valued GE Capital business that the company is committed to realising/showing value from.  Thoughts from the recent Investor Day can be found here.

I got active in the stock during December when it briefly fell below the US$500 level which felt wrong/too low to me given the company remains at the key apex of the information/internet/mobile society so one of the West Coast's finest makes the list.  Last big write-up here.

The merger of Europe's two largest cement names gives me the same hopes as the aforementioned Aviva-Friends Life link-up.  Cost-cutting / significant self-help scope offsets the difficult underlying European economy in my view (even if both companies are truly international).  Last link here.

NN Group
Yet another spin-off!  During 2014 I enjoyed good success with Voya a spin-off from ING Groep and this year I am highlighting the Dutch equivalent NN Group.  Same rationale as Citizens Financial above.  Link here.

Hard to know what to add to the superlatives I have previously written about the world's best larger cap gold company.  Correctly retained from last year's list.  Link here and here.

Remy Cointreau
Not many overt China plays so far but here is the first of two - because I still see opportunities in the Middle Kingdom despite a growth slowdown and anti-corruption crackdowns.  The first is in spirits (link here)...

...and in Macau gambling stocks.  I have chosen the historic incumbent, strongest balance sheet and highest yielding stock.  Yes it is probably the slowest growing too but on a risk-reward basis it is probably the most sensible...as the rest of the sector names are probably more of a trade (not I did not say gamble...)

Smith & Wesson
The gun manufacturer has not had the easiest time recently but as a strong branded business I still believe it is materially undervalued...and unfortunately with structural growth opportunities over time.  Most recent write-up here.

Time to re-load on the agricultural names too.  I still own Agco and Deere but I am going to specifically highlight the Swiss seeds/crop protection company which should be trying to get their act more firmly in order during 2015 after that (partially tax induced) approach from Monsanto during 2014. Link here.

The final name is a great Belgian company with super recycling and refining technology.  Throw in some better perceptions towards companies with some precious metals correlation and potentially some improvement in the European economy and the stock looks undervalued.  Link here.

So there it is...the 15 global stocks for 2015.  The right or the wrong names for the year ahead?  Drop me a comment below if you have any strong views...

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