Wednesday, December 18, 2013

Share Investor's 2014 Stock Picks

2013 has been another great year for stocks rising almost 15% to roughly 4700 on the index so forget about what might happen and suspend belief for a nanosecond and take a squiz at what I have for you.

The stock picking monkey has been very busy this year with a few surprises.

This year the monkey had a really hard go at it but managed to get through quite a few interesting picks.

This year I have picked stocks based on nothing except value of the stock based on where I think it will go.

Please keep in mind dear readers that the picks are my own and they reflect my investment philosophy and not necessarily anyone else's.

This year I have sold some stocks, PPL, HLG, MHI, BGR and others, because I had to - My ex-wife said so - and some of them had run their natural course, about $110,000.00.

My picks are primarily based on a long-term view, regardless of the current short to medium term market turmoil and economic uncertainty, I pick a down year for 2014.

NB: Since I think most of my portfolio consist of the best stocks on the New Zealand market, I found it difficult to pick stocks outside my realm of self interest. This year I will give you the individual number of shares I have of each stock.

[RYM.NZX] Ryman Healthcare has got to be the pick of the bunch. One that I have held for at least 6 years I bought this one for $1.97 and it has returned at least 400%. I have 5000.

This had another record year this year of a 22% profit lift on last year of $58.5m.

It is looking good for the short to medium term but could face some hurdles when its housing stock needs modernizing because it is the company that owns the stock.

The big thing of recent weeks is the fact that their foray into Australia looks to have gone better than planned and they are going into the second stage of this development. They are also looking at another site.

This is not a stock that I'm currently buying but new investors could not find a better stock to get into.

Id climb into this one with gay abandon, especially if the Oz experience mirror ours and we find that out in March/April 2004.

[MFT.NZX] Mainfreight Ltd is only the second stock of mine that I deem is worth another glance in 2014.

Mainfreight has had an up and down year in respect of results with Novembers report indicating a profit up 7.7%  at $29.87m but some warnings about various divisions struggling next year.

I am however picking a stellar year for Mainfreight, with revenue up on last year and profits up at least 10% on most divisions. Why do I say this? Simply because of the way Mainfreight is designed for individual success, I am picking 2014 for Mainfreight to finally get things together and for that individual stuff to combine and really make things hot in 2014.

Buy on anything close to $10, with a view to long term gains.

[FPH.NZX] Fisher & Paykel Healthcare Ltd is a stock that I have picked for each stock pick series and here the reason why, well several reasons why it should be in your portfolio picks for next year.

This years profit result, announced mid November was a record at NZ$303.9 million, 14% above the prior comparable period as a result of strong revenue growth in the company’s two major product groups and that is set to continue next year.

The revenue is growing and set to grow further in 2014 and set to double in 5 years - it grew around 15% this year and is set to outstrip that in 2014.

Our dollar certainly cannot stay where it is for 2014, it is set for a big re-ratng because of interest rate hikes.

The product range is huge for 2014, and plenty of funds will be used to produce more for the new year.

Get in at under $4.00.

[SKC.NZX] Sky City Entertainment Group Ltd has had a good 2013, with a  FY 2013 profit at the hands of an excellent CEO who was able to win the Govts (national and local) over their plans for a convention centre and a number of strategies planned and executed to produce pleasing results for shareholders. The share price of the company has not however tracked its increased fortunes and has been trading in 2013 from $3.50 to just over $4.50.

It has also won the Govt over in Adelaide with a major revamp of that particular centre. with lower taxes as part of the deal.

This and the fact that all of their assets are competition free mean this one is probably the buy of all my picks this year.

Its had a profit downgrade on the 17th of  December but these things happen it will shine again - spectacularly .

At $3.60 this share is cheap, get it while you can.

[CNU.NZX] Chorus Ltd. This may seem an anathema to my usual picks and it is, it is purely a spectator play because I see it as very cheap at $1.45 and worth releasing at about $2.20-$2.30.

Most notably its asset backing is $1.21, so that leaves 24c for intangibles and that looks very cheap at that price.

No matter what the larger market may say about the dividends - and if they come at all watch for another rise - they will come again soon, and any way your not going to be in long enough to know or care about those.

Get them while you can.

[HLG.NZ] Hallensteins Glassons Ltd used to be a company I held for about 5 years until my wife considered it surplus to my requirements any way I made about an additional $4000 from a $2500 outlay. Considered that this had had its day. But wait bad news and its time to go sniffing again.

Hallenstein Glassons has warned investors it expects its first-half net profit to fall by 20 per cent compared to last year. The NZX-listed clothing retailer said it expected to post a net profit of $8 million for the six months ending February 1, a decrease from last year's interim net profit of $10.4m.

There has been the talk of international competition from various websites, tax free, and they may have a point, but this has happened before and Hallensteins has aways managed to counter this and get back margins.

I have done this before with this share and have held it overnight and have held long term, either way you will get your money back.

Buy up to $4.50.

[HNZ.NZX] Heartland Bank New Zealand Ltd has been a bank only since last December and its shares were trading last week at around 85c, what they are trading at now, below their net tangible asset value of 85.2c. Assuming the assets are valued accurately, the shares are therefore relatively cheap.

Profitability is low, sure, but it is improving. In the coming year, it is expecting net profit of $34m to $37m.

As a new bank, Heartland has been given more onerous capital requirements by the Reserve Bank than the established players. Its tier-one capital ratio - basically the equity as a percentage of risk-weighted assets - must exceed 12 per cent, while the requirement for ANZ and Westpac is 6 per cent.
They all exceed the minimum by some distance, but Heartland naturally has a little less headroom. Its tier-one capital ratio at balance date was 14.8 per cent, providing a buffer of 2.8 percentage points over the minimum.

You would do well to get them below $1, get them while you can.

[SUM.NZX] Summerset Group Holdings Ltd has a strong development pipeline for future growth. Five villages are currently under construction, including the recently acquired site in Dunedin. Summerset also has three quality land sites in Karaka, Katikati and Hobsonville and is continually evaluating new sites to support the development of further villages based on what is the sheer demand for units.

In 2012, 160 retirement units were completed at four of Summerset’s developing sites –Hastings, Nelson, Dunedin and Warkworth. Summerset now have 1,646 retirement units and 327 care beds.

The company has also purchased two new sites in Auckland: 7.6 hectares of waterfront land in Hobsonville and a prime 3.9 hectare site at Ellerslie. These sites bring their land bank to 1,400 retirement units and more than 400 care beds. The one in Hobsonville should be a cracker, pure waterfront, prime position, plenty of land for decent sized footprint.

This should do what  [RYM.NZX] & [MET.NZ] have done and defy all expectations and take off depending on what they all do come reporting season.

Get them while you can.


YUM! Brands Inc



A pick from 2010, 2011,2012, & 2013 Yum ! Brands Inc has consistently grown each and every year and achieved a 40000 th store opening for 2013 and with more tasty growth to come in 2014 and beyond from China & India still make this company a Finger Lickin proposition. It will never be cheaper. China is the BIG growth story for 2014.

Conclusion & Outlook for 2014

2014 will be an interesting year for stocks, will they do what they did in 2013, unlikely. What we will have to wait and see is what the USA will do with unwinding there debt - will they,wont they - how China reacts to that and how Europe will do has a major effect on that.

As an investor, you must simply find value in the companies you invest in. Its out there, you just have to do a little research yourself.

You may not find this approach pleasing, if you don't find a broker and put your money with him or her.

These are my picks.

*Just an added footnote. Please feel free to post your own stock picks for 2014. The only requirement is that you say why and declare any financial interest. Post them below at the bottom of this piece or click here.

Disclosure : I own SKC, FPH, MFT, RYM, CNU, HLG, SUM shares in the Share Investor Portfolio.

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