Grand National investment punts

As we approach one of the biggest events in the horse racing calendar Helal Miah, investment research analyst at The Share Centre, places his bets and outlines some investment choices ready for when the tape goes up

Grand National investment punts

The odds-on favourite

An odds-on favourite tends to be regarded as something that will do well in current competition and we believe a company that fits perfectly in to this category for investors is GlaxoSmithKline.

Investors should appreciate that the defensive nature of the sector and the stock, and the competitive yields paid to investors, make this a core holding for many portfolios. One of the company’s main attractions, which puts it a length in front of over other large pharmaceuticals, is the promising pipeline of drugs coming through R&D.

Investors should note that future improvement should be helped by new products, diversification and increasing exposure to emerging markets. The company is very cash generative and is committed to using this towards increasing dividends, share buybacks and bolt-on acquisitions. As a result, we recommend GlaxoSmithKline for those seeking income and willing to accept a lower level of risk.

The outsider

It’s not unusual for punters to opt for a bigger gamble as well as a safe bet when it comes to the national with the hope of big gains. This ethos is similar to that of a more experienced investor’s and with that in mind, Amerisur Resources may be a suitable punt for higher risk investors.

This oil and gas exploration company is on our ‘buy’ list, chiefly for its exploration prospects and rapid increase in productive capacity. We would warn investors, however, that the group operates in a potentially unstable region so therefore represents a high risk investment opportunity.

Furthermore, any further falls in the price of oil is a clear risk which could result in further cutbacks in exploration spending and investors should note it has already cut back on production at higher cost wells, focusing for the moment on the more profitable wells.

The one if the going is heavy

If the going is heavy then investors will be looking for a more defensive stock and a safe bet that will protect their investments in a muddy environment. This is certainly the case at present, given a number of political uncertainties such as the Grand National EU debate. Investors may therefore be best placed to choose a company such as Imperial Brands.

Tobacco stocks in general are considered defensive compared to other sectors because sales are more consistent and generate a lot of cash for companies. This company continues to perform well and recently stated that it remains on track to meet full year expectations. Imperial Brands is a suitable option for medium risk income-seeking investors due to the very healthy dividend, excellent track record of dividend growth, the growing success of alternative products such as e-cigarettes and the possible revenue boost from improving US-Cuba trade relations.

The one in good form

Committed tipsters will spend copious hours researching and analysing previous performances of runners and riders, subsequently picking the one in good form. Courtesy of our own research and examination, we believe a company that has a stable past performance and likely to jump the fences of market instability is packaging company RPC.

The group’s shares have strongly outperformed the market over the past year and the market is expecting RPC’s earnings and dividends to grow by 20% over the next two years in contrast to more modest expectations at other rival companies. Its recent move into the fast-growing Asian markets, the streamlining of European operations and strong dividend policy are all attractive aspects for investors looking for a mixture of income and growth.

The steeple chaser

A company unlikely to unseat you as it rides the course of market volatility is mobile telecommunications giant Vodafone. The mobile telecommunications company has certainly had to jump over a few fences to get to where it is today. However, at present it is beating market expectations and has been outperforming ever since we upgraded the stock from a ‘hold’ to a ‘buy’ in February 2015.

The group has been benefiting from increased data demand in Europe combined with the continuing rise in smartphone dispersion in the emerging markets. Furthermore, it has been streamlining its business, selling some of its non-core assets, using the proceeds to pay off debt. Although it has a few furlongs to go, at present the good dividend yield should make this an attractive stock for income seekers willing to take on a low to medium level of risk.

 

Please remember this is just the view of Helal and The Share Centre and does not necessarily reflect the views of Every Investor. All the usual caveats about investing apply

 

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