WHAT TO BUY IN 2020

After picking a string of winners in 2019, three wise men offer their tips for the year ahead

INVESTMENT EXTRA

Expert tips and advice you simply can’t afford to miss

IN THE hope of helping readers to a more prosperous new year we have asked our Three Wise Men of the stock market to give us their share tips for 2020.

Each has given a recommendation for brave investors who are prepared to take a risk, and one for the cautious.

As for last year’s tips by the trio, they all rose by more than 20pc, and the star performer, online fashion retailer Boohoo, rose by more than 80pc.

Remember that share prices can go down as well as up and that following tips always involves the risk of losing some or all of your money.

It’s a good idea to do your own research as well, before investing.

JUSTIN URQUHART STEWART CO-FOUNDER, SEVEN INVESTMENT MANAGEMENT FOR THE CAUTIOUS: HSBC

THE international bank has had a tough year. It’s based in two places that are suffering from political instability – the UK and Hong Kong – and that has hurt its share price.

However, for a bank, HSBC is quite well run, and it has much of its business in the fastest-growing part of the planet: China and the surrounding nations.

When you consider that it already straddles a gap that most companies have been trying to bridge for the past decade – in that it is a western brand that is known in China – HSBC starts to look undervalued as a longer term investment. A dividend yield of 6pc is a nice cushion too.

FOR THE BRAVE: HARGREAVES LANSDOWN

THERE’S no such thing as bad publicity… unless you’re associated with Neil Woodford.

Financial platform Hargreaves Lansdown has come under a lot of scrutiny for its role in the Woodford saga – and there is likely to be more to come, including investigations by the Financial Conduct Authority. It certainly isn’t a happy place to be working at the moment, if the stories are to be believed.

But, if you can look through the noise, there are some positives. Do-It-Yourself investors are still very much a part of the UK market, and won’t go away any time soon. Hargreaves is still the best investment platform out there, and the quality of the technology is increasing quickly.

Being an established brand helps too – people don’t move bank accounts, and they don’t tend to move trading accounts either. It could very well get worse before it gets better, but Hargreaves might be something to tuck away.

RICHARD STONE CHIEF EXECUTIVE, THE SHARE CENTRE FOR THE CAUTIOUS: VODAFONE

THE mobile and telecoms giant has had a difficult few years for a multitude of reasons, including slow economic growth in Europe and South Africa along with competition issues in India and a hefty tax bill. Other issues include the trend towards the separation of network contracts and phone purchases by consumers who are holding on to their handsets for longer. Tougher regulation has also been a factor.

But there has been recognition for the need for deep changes within the group, and it has been on the path to making strategic acquisitions.

Low-returning assets are also being offloaded, with the most significant due to come soon in the form of the demerger and possible listing of its portfolio of mobile towers in Europe. This should help in reducing the debt load following the recent dividend cut. A new chief executive is in place who should carry on with the simplification of the group’s portfolio and adapt it to the increasingly digital world.

Emerging markets growth remains strong and data demand across the world is expected to drive future prospects. At these low valuations and still attractive dividend yields, Vodafone is one to consider for 2020.

FOR THE BRAVE: BREEDON GROUP

LISTED on the junior AIM market, Breedon is the biggest independent building materials company in the UK.

Despite frosty market conditions for the sector, the group has delivered a strong performance this year, with increased revenues, improved profits and robust cash flows.

It is a sound business with cash generation, so it can maintain high levels of investment while remaining resilient to difficult market conditions. Following the election, which removed uncertainty in the construction sector, it looks appealing.

Despite the shares rallying strongly, they still look good value. I feel they have racy potential heading into the new year.

ANDY BELL CHIEF EXECUTIVE, AJ BELL FOR THE CAUTIOUS: BEGBIES TRAYNOR

THE insolvency specialist and property services company earns two-thirds of its revenue from activities which are counter-cyclical, which means, in simple terms, that when the economy as a whole does badly, it stands to do well. In any future slowdown or even recession, Begbies Traynor should see rising demand for its insolvency services. On the flipside, businesses can also come under pressure as the economy starts to recover from a difficult period as they risk failing due to cash flow constraints. Therefore Begbies is attractive as an investment, whichever way the economy goes.

FOR THE BRAVE: CENTRICA

MARKET expectations are very low for the British Gas owner after a long period of losing customers and delivering poor returns for investors. That presents an opportunity for those willing to stomach high risks and to take a contrarian view. Major changes are under way, including plans to exit its interests in oil, gas and nuclear with proceeds likely to be used to reduce group debt. British Gas is also offering much more competitive prices and early signs suggest that this tactic is helping to boost customer numbers. There is a chance its disposals don’t fetch a good price or don’t happen at all, and that rival energy providers also slash prices. Therefore this is not an investment for anyone expecting a smooth ride.