Monday, January 1, 2018

Brokers' Picks 2018: Hot stocks for the new year


Brokers have picked a diverse mix of stocks for 2018, in many cases opting for those that have underperformed in the last year or so.
It's always worth remembering that winning the Brokers' Picks competition requires different strategies to everyday investing. A single year is an arbitrary time frame – often not long enough for value investors but too long for traders.
It is interesting to see the way participants opt for different ends of that spectrum in an attempt to capture a market beating annual result.
Hamilton Hindin Greene has leaned most heavily towards value investing picking well established stocks that have been out of favour and could present a bargain.

The two most obvious examples in their selection are Fletcher Building and Comvita – both strong companies that were punished by investors in 2017.
"Fletcher Building aired plenty of dirty laundry in 2017," says Hamilton Hindin Greene's James Smalley
"Whilst the risk remains of more coming to light, we believe the risk of major surprises has been limited by the announcements to date, and the recent KPMG Audit."
When you strip out the downgrades associated with the Building & Interiors business unit, Fletcher Building actually had a reasonable year, Smalley and his team noted. "We expect continued strong performance from most divisions, and a return to more normal performance from the Building & Interiors business unit."
Comvita had a tough year, its share price falling 37 per cent at one point before almost recovering back almost to break even by December.
"The decline was the result of investors' concerns of a lower than usual honey harvest, the discovery of myrtle rust in the North Island, and a drop-off in grey channel sales," says Smalley.
"We see these headwinds as temporary, and see significant upside potential on the back of better climatic conditions, continuing natural health product market demand from China, and favourable societal trends."