11th September 2014
On the back of the apparent market lull over the summer months, the old City adage asserts that investors should “sell in May and go away, don’t come back until St. Leger Day”
With that day arriving this Saturday, 13 September we highlight three ‘St Ledger day’ stocks to potentially add to your portfolio.
With its shares off by 10% over the past 12 months, pharmaceutical giant GlaxoSmithKline may offer something of decent opportunity for investors with a lower appetite for risk.
Helal Miah, investment research analyst at stockbroker The Share Centre believes the defensive nature of both the pharma and biotech sector and the stock, as well as the competitive yields paid to investors – currently forecast at 5.6% make this a core holding for many portfolios.
GlaxoSmithKline is also known for being very cash generative and committed to using this towards increasing dividends, share buybacks and bolt-on acquisitions. Miah says: “One of the key attractions of the business over other large pharmaceuticals is the promising pipeline of drugs coming through R&D. The group also remains focussed on reducing costs, new manufacturing processes and a major change programme, which is expected to save £1bn a year by 2016. The hope for future improvement should be helped by new products, diversification in consumer healthcare and biotechnology and increasing exposure to emerging markets.”
Unlike Glaxo, the FTSE 250 listed RPC is not a household name among UK investors. But the supplier of plastic packaging counts a number of big brands among its clients, including Nivea cream and Dulux paint. The group, which has enjoyed a 15% share price rise over the past year supplies a wide range of packaging products across many different sectors provides good diversity and exposure to a number of consumer markets says Miah, who tips the share for medium risk investors.
He says: “The company’s recent move into the fast growing Asian markets, the streamlining of European operations and strong dividend policy are all attractive for investors looking for a mixture of income and growth. The poor economic backdrop in Europe and imminent prospect of rising UK interest rates may weigh on the shares. However, we believe they offer good value at this level, having dipped from a recent record high-point in June.”
For intrepid investors willing to take on that bit more risk with the aim of potentially generating higher returns Miah points to mining group Randgold Resources, just 1% up over the past 12 months. He says: “Randgold Resources is a pick for higher risk investors looking for an investment that is a play on the price of gold. The company has been ramping up production consistently to record levels, while expansion and exploration seem to be progressing well. It produces gold at a relatively lower cost compared to most of its peers.”
However, as its principal operations are in Mali, a country with significant levels of political instability notes Miah, the shares as a result are not for the faint-hearted. He adds: “The recent tensions have impacted confidence in the company’s share price, but the operations on the ground remain largely unaffected.”