The standout stock among our own stock-picks was Associated British Foods, which is up 27.06 per cent since the start of the year. Oil and gas giants Royal Dutch Shell and BP also fared well, picking up 14.15 per cent and 8.23 per cent, respectively.
Year-to-date performance of stocks
Source: FE Analytics
Unfortunately, my own choice – FTSE 100 supermarket Tesco – hasn’t managed to turn its fortunes around and has lost nearly 10 per cent.
I can take heart that my pick for this year wasn’t Blinkx though, which is down an eye-watering 84.96 per cent year-to-date.
Maybe we should leave it to the professional fund managers after all…
Associated British Foods
News editor Thomas McMahon, who recently joined FE Research as an analyst, tipped food processing and retail firm Associated British Foods as a stock to watch for 2014 in January.
One of his key reasons for picking the stock was expansion plans for its discount Primark chain into Europe, as well as key brands like Twinings and Ovaltine, which are seeing strong growth overseas.
Associated British Foods had a stellar 2013 and has continued to be one of the best-performing stocks in the FTSE 100 so far this year.
FE Alpha Manager Francis Brooke who runs the Trojan Income fund took profits in the company earlier this year, citing its high price-to-earnings ratio – currently at 39 times – as a reason to be wary.
Royal Dutch Shell
Senior reporter Alex Paget opted for oil and gas giant Royal Dutch Shell, following the lead of star managers like Richard Buxton, James Lowen and FE Alpha Managers Adrian Frost and Adrian Gosden.
Paget likes the fact that the company continues to appear cheap relative to history and points out it hasn’t cut its dividend since the First World War.
This, he says, is likely to attract investors looking to take profits from small and mid-caps, which have had a stellar run in recent years.
Shell had a difficult 2013, but has been a solid performer over the longer term.
Over five years it’s up 119.79 per cent while the FTSE 100 has gained 93.54 per cent.
It’s lagged the stellar returns of the FTSE 250, though.
Performance of stock vs index over 5yrs
Source: FE Analytics
The company is currently yielding 4.9 per cent and is on a forward P/E of 11.2 times.
Royal Dutch Shell is a staple for UK equity managers, with more than 100 portfolios in the IMA universe backing the stock in their top-10.
BP
Trustnet editor Joshua Ausden also thought the oil and gas sector was due a rise at the start of the year, but he opted for BP on valuation grounds.
The stock is up 8.23 per cent in 2014, ahead of the FTSE 100 index which has gained 3.75 per cent.
Ausden says he’s standing by BP because he thinks the market is set for a sustained period of volatility, which should see money pour back into solid large caps stocks.
He adds that the company remains on a discount to the market as a result of the 2010 Deepwater Horizon oil spill, has a strong balance sheet and a good yield, which should help it to weather the storm.
A massive 292 funds in the IMA universe hold BP in their top-10, including Artemis Income, Liontrust UK Growth and Tom Dobell’s M&G Recovery fund.
The company is on a forward P/E of 11 times.
Tesco
Tesco may be disappointing at the moment, but it’s one I’ll hang onto.
Thankfully, I’m not the only one – contrarian fund manager Alastair Mundy recently bought into the supermarket as well as fellow struggler Morrisons.
Both are among the worst-performing stocks in the FTSE 100 so far this year.
On a valuation basis, the stock is cheaper than it’s been since 2009 so I think there’s plenty of room for upside from here.
I also think fears over a price war in the sector are overblown and so Tesco could see an upgrade once investors move past this issue.
Twenty-six funds in the IMA universe hold Tesco in their top-10.
Besides Mundy’s Investec Special Situations fund, deep value duo Kevin Murphy and Nick Kirrage hold it in their Schroder Income portfolio.
Blinkx
Small and mid-cap stocks suffered a sell-off in February, but that doesn’t seem to be what’s troubling video search and advertising firm Blinkx.
The company has been bleeding cash over the last several years, suffering an astounding 85.
44 per cent loss over the last 6 months alone.
Since it was listed in May 2007, the stock has halved, though it did experience strong gains throughout 2010 and again in 2013.
Performance of stock since 2007
Source: FE Analytics
The tiny UK company added further insult to injury after it issued a profit warning yesterday, sending shares into free fall.
Production editor Anthony Luzio is understandably disappointed, but says he’ll continue to hold the stock, however.
“Well that was quite a nasty shock! I suppose the alarm bells should have been ringing when a blog questioning how Blinkx made its money sent shares tumbling earlier in the year,” he said.
“The company statement released this week blaming its failure to meet targets on “industry-wide issues of efficiency and effectiveness” is also concerning.”
“I’m not going to sell out though – and not just because this would crystallise losses. This stock has always been incredibly volatile since I bought it and suffered a similar fall late on in 2011 before fully recovering and more.It has plenty of cash on its balance sheet and is still growing, so it could rebound, hopefully…”
Only one fund – perennial underperformer Manek Growth – holds Blinkx in its top-10.
His 10 per cent holding in the firm has weighed very heavily on performance, sending it to the very bottom of its IMA UK All Companies sector year-to-date.
Balfour Beatty
Reporter Daniel Lanyon, who joined the FE Trustnet team in February, has jumped into the fray, selecting UK infrastructure group Balfour Beatty, in spite of the fact the company recently issued its fourth profit warning in two years.
“After recent sharp falls – it’s at a 11 year low after a profit warning yesterday – the stock has become undervalued as it should be a long term beneficiary of the continued recovery in the UK economy,” Lanyon said.
“Also, infrastructure spending can only increase as the Treasury coffers continue to improve, which the company is likely to benefit from. It may fall further in the short term but I think this would only be a further opportunity to buy in.”
The FTSE 250 stock is down 20.23 per cent year-to-date after suffering a sharp sell-off in early May and another dip on the back of this most recent profit warning.
Year-to-date performance of stock vs index
Source: FE Analytics
The only fund managers who are backing the stock in their top-10 are James Thorne and Matt Evans in their Threadneedle UK Mid 250 portfolio.
