As long as you are not putting all your eggs in one basket, however, industry experts say there are merits of holding a single stock.
Here are five that the experts are tipping at the moment:
Aviva
Richard Hunter, head of equities at Hargreaves Lansdown, says he likes the growth and income potential of multinational insurance group Aviva.
"It is a stock we like even after the recent 27 per cent cut to its final dividend, which knocked the share price by 12 per cent that day. However, it is still yielding around 6.8 per cent, making it one of the higher payers in the FTSE 100."
"That takes away a bit of general risk and while it is still quite a volatile stock, it is one that could do very well," he added.
The £9.5bn company is the sixth-largest insurance group in the world.
It has struggled compared with other members of the index in recent times. According to FE Analytics, Aviva has returned 58.31 per cent over the past 10 years while the FTSE 100 has returned 170.48 per cent.
Performance of stock vs index over 10yrs
Source: FE Analytics
Over one year the blue chip insurer has lost 4 per cent, despite the recent global equity rally.
Overall, 20 funds count it as a top-10 holding. One of those is the five crown-rated Cazenove UK Opportunities, which is run by FE Alpha Manager Julie Dean.
Dean has 3.81 per cent of her £1bn portfolio in Aviva, making it the fund's fifth-largest holding.
RSA
Graham Toone (pictured), head of research at AFH Wealth Management, says that the giant insurance group RSA is an attractive buy at the moment, even though it is another one that has recently slashed its dividend.
"A stock that we think has been unfairly re-rated is RSA," Toone said.
"It made a cut to its dividend recently so that it could reinvest some of its assets in emerging markets; however the market reacted quite badly to this news."
"The share price is now £1.19, having previously been at around £1.40 prior to the dividend cut."
"For clients looking for an out-of-favour stock, RSA could be a very good choice."
Investors in RSA have had mixed fortunes in recent years, but it has a strong long-term record, with returns of 234.23 per cent over the past decade.
The five crown-rated £1.7bn Threadneedle UK Equity Income fund, which is run by Richard Colwell and FE Alpha Manager Leigh Harrison, counts RSA as a top-10 holding. Harrison and Colwell have 3 per cent of the fund’s total assets in the company.
Twenty-three other funds in the IMA universe hold the insurer in their top-10.
BG Group
Toone likes the blue chip oil and gas company BG Group, for similar reasons as RSA.
"This is another that has been hit by bad news recently, but we think its share price has been unfairly knocked," he said.
"The reason we like BG is because of its oil field just off the coast of Brazil. They have located it recently and are now looking to explore it, which gives it the opportunity to unlock value from that asset."
"Its share price was down because its production numbers weren’t as good as the market expected. Although over the last few months the share price is up around 9 per cent, over the last year it is down 20 per cent."
The £39bn company sits in the FTSE 100 and operates a number of oil and gas fields across developed, emerging and frontier markets.
BG Group has returned 438.12 per cent over the last decade, beating the index by 267.64 percentage points. However, the stock has lost 20.61 per cent over one year.
Performance of stock vs index over 1yr
Source: FE Analytics
BG Group crops up in the top-10 holdings of 138 funds in the IMA universe. These include Julian Fosh and Anthony Cross’s Liontrust Special Situations and Liontrust UK Growth funds – both of which are five crown-rated.
Imagination Technologies
Helal Miah (pictured), investment research analyst at The Share Centre, likes mid cap company Imagination Technologies, which he says has real growth potential.
"It is in a similar mould to ARM Holdings, in that it makes chips for smartphones, tablets and other household appliances."
"However, we feel Imagination is a bit more diversified as it owns the brand Pure, which produces DAB radios."
"Also, at the last Consumer Electronics Show in Las Vegas, it released a new range of speakers that got tech investors quite excited."
"It has been a bit of a volatile stock and the price has dipped a bit due to its tussle with ARM Holdings over patents."
"The stock was trading at around £7 per share last summer, and is now trading at a mid-range of roughly £5.30."
Imagination Technology is a FTSE 250 British-based maker of mobile graphics and microprocessor chip technology.
Its returns of 2,689.49 per cent over 10 years are more than seven times those of the index.
Performance of stock vs index over 10yrs
Source: FE Analytics
Only four funds hold Imagination Technologies in their top-10. One of these is FE Alpha Manager Nigel Thomas’ AXA Framlington UK Select Opportunities portfolio.
BHP Billiton
Miah says FTSE 100 mining giant BHP Billiton is a safer choice.
"For a more balanced stock, I like BHP Billiton," Miah said.
"I think there will be increased demand for natural resources as the global economy continues to recover. The US economy is definitely recovering and there is better data coming out of China, which is all good news for BHP Billiton."
"It is a lower-risk mining company as it is more diversified. Unlike Rio Tinto – which we also like – it only has one-third of its business in iron ore extraction, so has a mixture of mining operations. I think the company has the capacity to increase production."
"It has a yield of 3.5 per cent and its share price is £21.21," he added.
BHP Billiton has a market capitalisation of £44bn. It has posted strong long-term numbers, and has largely kept up with the FTSE rally in the last 12 months or so.
Performance of stock vs index over 1yr
Source: FE Analytics
Investec Global Natural Resources is one of 144 funds that count BHP Billiton as a top-10 holding.