As a nation, we’re pessimists – poles apart from our friends across the pond who are born optimistic. For better or for worse, we like our doom and gloom.
Lack of interest in UK equities is such that even some of the market’s bulwarks – FTSE100 listed Shell, for example, – are wondering whether the UK stock market is the right place to showcase their wares. Among them is Jason Hollands, a director of wealth manager Evelyn Partners. He says: ‘For all the negativity about the UK economy and the Government, many investors forget that there are many great, world class companies to be found on the UK stock market.
In other words, many UK companies are set for a share price surge that could generate handsome returns for those prepared to be brave and buy when most investors are shunning them. All 20 companies can be held inside a tax-friendly Individual Savings Account where future gains are free from tax. With a change of Government on the horizon, tax shelters such as Isas are going to be worth their weight in gold.
Its share price has been battered in the past two years – down 49 per cent – as investors have got cold feet over the threat to its business of laboratory-grown diamonds and the rise of electric cars . The dividends are equivalent to an annual yield of 3.5 per cent. ‘BP and Shell are in a strong position to reward shareholders with rising dividends. Also, any share buybacks they do will support their share prices. As a result, they are likely contenders to be the new total return kings.’
Although its shares have taken a battering – down 52 per cent over the past year – Burberry remains a great business. He also believes the 2020 acquisition of US pharmaceuticals business Avanti Polar Lipids could lead to strong performance in its vaccines business. The shares have fallen 37 and 48 per cent over the past one and two years respectively – not helped by delays over the appointment of a permanent chief executive since Jette Nygaard-Anderson departed the post late last year.
‘At the current share price,’ says Needham, ‘Lloyds shares should generate mid-teen annual returns for investors.’ Investor Interactive’s Richard Hunter says the opportunity for the company to write additional insurance premiums with consumers in these two continents is ‘significant’.9. Rentokil Initial Rentokil's shares trade at £4.53 and benefits from 'a virtuous cycle – a high market share, leading to big profits and price competitiveness'
He adds: ‘Rentokil benefits from a virtuous cycle – a high market share, leading to big profits and price competitiveness.’ Sam North, market analyst at trading platform eToro, says the country’s leading supermarket is historically undervalued by the stock market. The shares are priced at a £2.94 and in the last financial year, it paid a dividend of 10.75pence a share. The dividend yield is 3.7 per cent.Value for money bonds these two retailers – Dunelm in the furniture sector and Greggs in the fast food market.
14. JD Wetherspoon JD Wetherspoon has ‘some of the most untapped pricing power’ amongst UK domestic businesses, according to Ben Needham of Ninety One ‘Martin has just put his own powder to work, buying £7million of shares at £7 a share,’ says Needham. ‘Founder owners buying their own stocks is often no bad signal to investors looking for an investment home.’
With a new management team in place and the opportunity to be part of big infrastructure projects such as the Sizewell C nuclear power plant in Suffolk and Network Rail’s £40billion spending plans between now and 2029, the company has the potential to grow its profits . Dan Coatsworth, investment analyst at AJ Bell, says: ‘PayPoint is one of those businesses that people are quick to dismiss as irrelevant in the modern world, yet investors would be missing out on a stock that is cheaply valued and paying a big dividend.’
‘It’s a resilient company,’ says AJ Bell’s Dan Coatsworth, ‘and market forecasts indicate it will make steady profits over the next few years’. The company is a key holding in investment fund Tellworth UK Smaller Companies. James Gerlis, manager, says TT Electronics offers ‘exceptional value’ supported by a dividend yield of 4.5 per cent. The shares are priced at £1.55.