October 15, 2021

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Fit And Go Forward

Ten writers’ share tips that could take off in 2021

At the other end of the scale, each a hair off posting 42pc falls, were WH Smith and Lloyds Banking Group. The former was smashed after investing in travel outlets in a year when people stayed at home. Lloyds was a leveraged bet on the economy growing – only it did the opposite, compounding the loss. An 11th stock pick last year, Glencore, fell 1pc.

It’s important to note that our picks are fun and not serious financial advice. So with that in mind, here are our 10 selections for 2021. Hopefully in a year that’s a bit more boring these picks will outperform.

BAE Systems

Alan Tovey: Sadly, the world is not getting any safer so buying into one of the world’s biggest arms dealers could be a necessary evil. Like other defence firms, BAE has been largely unaffected by the pandemic as governments keep spending on weapons. Dividends have been reinstated after a pandemic pause, orders are looking a bit better than they did before coronavirus, and BAE has a £46bn backlog of work.

Boris Johnson has also promised to make the Royal Navy the “foremost in Europe” as he announced a £16.5bn settlement for the Ministry of Defence in November. BAE builds warships for the Navy and is likely to be in the frame for any further vessels. BAE is also a major player in the UK’s Tempest next-generation fighter. Even if it doesn’t get off the ground, the technology from it should position the company to get on board other programmes. BAE also trades at a discount compared with many of its US peers even though the US – the world’s largest military spender – is a major BAE customer.

2020 tip: Avon Rubber +51pc

Keywords Studios

Matthew Field: Gaming has been one of the big winners of the pandemic. People stuck at home on their sofas have turned in droves to games consoles to get through the boredom. There are relatively few UK stocks to choose from in this sector, and Dublin-headquartered Keywords Studios has had a strong lockdown, repeatedly beating guidance. Aim-listed Keywords doesn’t make its own games, but provides services including art design, sound editing and marketing to 23 of the world’s biggest games makers, which should mean it offers a steady earner.

2020 tip: Sumo Digital + 85pc

AstraZeneca

Julia Bradshaw: The epidemic has shone a light on the potential of the life sciences industry to deliver healthy returns. That’s why a bet on AstraZeneca could add a nice dose of growth to a portfolio. The company has a pipeline bursting with late-stage drugs and while it is focused on oncology, cardiovascular and respiratory, AstraZeneca will collaborate with other companies if it spies good opportunities – the partnership with Oxford to develop a vaccine against Covid is just one example. Admittedly, the shares are not cheap but the opportunities for growth in a sector that is attracting renewed investor interest is not to be missed.

2020 pick: GSK-25pc

Sage

Ben Marlow: Share-tipping in the current climate is like trying to nail jelly to a wall, so I’m playing safe and opting for the desperately dull world of cloud computing and accounting software. Sage has reached this point in the crisis in decent shape, even if its share price suggests otherwise. Despite emerging from the pandemic with £1.2bn of liquidity, very little debt, and a loyal customer base – recurring revenue is an impressive 90pc-plus – the shares are still down a quarter from pre-Covid levels of nearly 800p.

That’s because it hasn’t breezed through the crisis entirely unscathed. A £17m bad debt provision took a bite out of November’s full-year profits and the share price, which had started to slide again after recovering all its losses by the summer. With the stock back below 600p, there is an opportunity to buy into a company that is investing heavily and could take off once the recovery comes.

2020 pick: TI Fluid Systems -8pc

Greggs

Tim Wallace: Nothing says Christmas like a festive bake from Greggs, and the high street chain has tapped its loyal followers to keep sales flowing despite the lack of footfall in town centres.

This correspondent’s own dedicated research indicates the seasonal favourite is selling like the proverbial hot cakes.

Although even this culinary titan flaked out when the pandemic struck it could be a valuable rebound share. After a year of precious little fun, British consumers are happy to spend on small treats, and if that means a pasty every few days then I can think of quite a few who would merrily do their bit to help the recovery.

2020 pick: Lloyds -41.7pc

Next

Russell Lynch: In Simon Wolfson, Next has one of the best chief executives in the business, and has remained profitable throughout the pandemic while rivals have gone to the wall. It also has a major advantage in its slick online operation. Brexit is a minor hindrance with an estimated £13m extra in import costs but normality should gradually return in 2021. So too should the Next dividend, which was suspended as a precaution early on in the crisis. The share price is admittedly only 15pc below the 2015 record high but I think there is more to come. Buy at £70.92 and cross everything.

2020 tip: Purplebricks -18pc

Naked Wines

Hannah Uttley: The online wine retailer has been one of the biggest winners of the pandemic as alcohol consumption shifted to people’s homes. In November, Naked Wines upgraded its sales growth forecast for the year after interim sales shot up 80pc. It has also seen significant growth in the US.

2020 tip: Reckitt Benckiser +7pc

easyJet

Tom Rees: Backing an airline mid-pandemic is like trying to catch a falling knife while blindfolded and spinning on the spot, but hear me out. My theory goes that the great British public are gasping for a weekend away in Malaga to put away enough sangria to wipe the last year from memory. By the end of lockdown 3.0, a bright orange easyJet plane sat on the Stansted tarmac will be a sight for sore eyes. easyJet shares nosedived 40pc this year but let’s pray vaccine tailwinds will soon be helping it take off in 2021.

2020 tip: Persimmon +3pc

Persimmon

Oliver Gill: Boris may want Britain to build, build, build itself out of recession, but he won’t be against the public buy, buy, buying houses to help give the economy a shot in the arm, too.

Eyebrows were raised when chief executive David Jenkinson stepped down after 15 months in February. But City fears were soothed by the appointment of National Express boss Dean Finch, a straight-talking executive who is not afraid of making punchy decisions (he got National Express off the railways in 2017, just as the dividend gravy train dried up).

This year will likely see renewed willingness by banks to lend to those wanting to buy their first home and Persimmon, whose houses are predominantly at the “value” end of the market, is well placed to prosper.

2020 tip: Whitbread -26pc

WH Smith

Laura Onita: I’m tipping WH Smith, again, even after the stock’s spectacular decline this year. The retailer had invested heavily in travel, including two acquisitions in the US, and relies on customers in airports, train stations and other travel hubs to make serious money. Its high street shops were profitable, too, before you-know-what. But while WH Smith will not immediately get to last year’s volumes, when people start travelling again, likely in the second half of the year as vaccines are rolled out, the retailer will be in good shape. The only way is up.

2020 tip: WH Smith -41.9pc

Read more: The stocks and funds to buy now we have a Brexit deal

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