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Four UK stocks to buy or gift this Christmas

06 December 2023

RBC Brewin Dolphin’s Rob Burgeman picks four Christmas-themed UK stocks.

By Jean-Baptiste Andrieux,

Reporter, Trustnet

Gifting shares of well-known UK companies for Christmas is probably not a very common practice during the festive season and recipients may not be as enthusiastic compared with the latest games console or fine jewellery.

But they might change their minds over the long term as shares are the rare potential Christmas gift that can increase in value.

The season of good will is often one that can benefit some companies more than others. Retailers, for example, thrive during the festive period as people clamour to buy last-minute presents for their loved ones.

Below Rob Burgeman, senior investment manager at wealth manager RBC Brewin Dolphin, picked four Christmas-themed UK stocks that could be in line for a bumper end to the year.

 

Diageo

Diageo is well positioned to be a Christmas winner as December is often a boozy month thanks to office Christmas parties, alcohol-themed gifts and New Year celebrations.

Burgeman said: “Diageo’s stable of businesses is a veritable who’s who of premium alcohol brands. Among them are the likes of Guinness, Smirnoff vodka, Tanqueray gin, and Johnnie Walker whisky. The group is widely seen as a real bellwether of the world economy, given its vast geographic spread.”

Performance of share YTD

Source: FE Analytics

Diageo’s share price has fallen 21.1% this year after the company issued a profits warning. While it is now below where it was in early 2020, Burgeman said that the company is well managed and diversified. Therefore, shares in Diageo could be a gift that “keeps on giving”.

 

Marks & Spencer (M&S)

Another company Burgeman believes to be in the pole position to benefit from the Christmas period is M&S. This is because families usually dig deep to spend a bit more in that time of the year, although the cost-of-living crisis has been a feature of 2023.

Burgeman said: “M&S is a company we all associate with Christmas in one way or another. After years in the doldrums, its turnaround programme has at last begun to yield results with a bumper set of figures in its last market update.

“There have been plenty of false dawns in the past, but this time there is good reason to believe that M&S has turned a corner. Profitability is the highest it has been for some time, its once waning clothes and homeware divisions are on the up, and management feels confident enough in the medium-term outlook to restore a modest dividend.”

 

Performance of share YTD

Source: FE Analytics

M&S’s annual Christmas advert caused a controversy last month as it has been accused of undermining the spirit of Christmas, but Burgeman called it a “storm in a teacup”, while the retailer could get the double benefit from both its clothing line and food business.

ITV

ITV is another end of the year staple, as most families in the UK sit down to watch Christmas programmes. Yet, shareholders will be aware that 2023 has not been a great year for ITV, as the shares of the broadcast television network are down 14% year-to-date.

Performance of share YTD

Source: FE Analytics

In fact, the shares have lost around half their value since February 2022 and have fallen even further over five years. For Burgeman, this is due to a weak advertising market, competition from streamers and worries about UK economic growth.

However, ITV’s shares come with a high dividend yield and there are reasons to hope that the company might be able to turn its performance around.

Burgeman explained: “With a dividend yield of more than 8% and potential growth coming from the likes of ITV Studios and ITVX, shares may well prove a gift for someone next year if they are willing to take the risk.”

 

JD Sports Fashion

End-of-the-year excesses as well as health-related New Year’s resolutions lead people to sign up to their local gym to get back in shape.

Therefore, JD Sports Fashion, which has been a City favourite for several years, could be a beneficiary of that seasonal cycle.

Performance of share YTD


Source: FE Analytics

The shares are up 31.4% year-to-date but is still far from its 2021 peak. As a result, Burgeman believes that now could be a “relatively” attractive entry point as UK consumer confidence suffers.

He said: “They could have further to fall, but the company is well managed and should be poised to bounce back when the UK economy recovers.”

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.