Our 15 Stock Picks for 2024 selects shares from the entire universe of London-listed companies ranging from FTSE 100 stalwarts to exciting AIM-listed growth companies and diversified Investment Trusts.
Anglo American
Anglo American presents an attractive value proposition for 2024. The diversified miner’s PE Ratio is just 5x 12-month trailing earnings.
Although there are questions about the poor state of the Chinese economy and the demand for commodities in the coming year, Anglo American is currently priced for a scenario much worse than the one that is likely to transpire in the next 12 months.
It is a classic disconnect that will likely lead to a rerate.
The company has one of the highest beta ratings of FTSE 100 shares, so expect sharp swings.
Ashtead
Ashtead has been one of the FTSE 100’s best performers over the past decade. The plant hire company has enjoyed substantial infrastructure spending in North America and has compounded buoyant demand with a series of acquisitions.
The stock fell out of favour in 2023 after Ashtead said sales growth was slowing primarily due to slowing activity in the TV and film business. The Hollywood writers’ strike will likely prove temporary, as will the impact on Ashtead’s earnings. The group is cash-rich and has a plentiful war chest to pursue its acquisition growth strategy.
Ashtead made 16 bolt-on acquisitions in the last half-year and is primed for future growth.
NextEnergy Solar Fund
The NextEnergy Solar Fund Investment Trust is an excellent example of a closed-ended renewable energy asset offering both the opportunity of capital appreciation and a robust dividend 9% yield.
The trust invests in solar energy generation assets and has 100 operating solar assets as of the end of September. In the six months to 30th September, the trust’s assets generated 599GWh, helping avoid 252,500 tonnes of CO2e emissions.
Although much of the portfolio is concentrated in the UK, the trust has facilities across the globe, including a portfolio in India and extensive operations in Chile.
Renewable infrastructure valuations suffered during the interest rate hiking cycle, and the trust trades at a 16% discount to NAV. We expect this to narrow substantially during 2024.
Tekcapital
This technology investment company trades at a significant discount to NAV and is set for a promising 2024. Tekcapital is preparing to list portfolio company MicroSalt and, in the process, crystallise value for shareholders after establishing the low-sodium company and taking it from concept to winning contracts with one of the world’s largest snack food businesses.
Tekcapital said it sees multi-million dollar revenue for all its portfolio companies (MicroSalt, Belluscura, Innovative Eyewear, Guident) in the coming year.
Early-stage companies faced a challenging 2023 as discount rates rose, making growth opportunities less appealing. This looks set to reverse in the coming year and could make Tekcapital shares look excellent value.
Alumasc
Alumasc has received the London Stock Exchange’s Green Economy Mark for contributing to the global green economy.
Alumasc is an exciting, sustainable building systems company paying a 5.5% yield. As one would expect, the company had a tough 2023 as construction activity slowed globally. That said, demand for the group’s innovative products supported strong cash generation in the most recent trading period.
The company has three core divisions: water management, building products and roofing. Each division has several brands specialising in various building solutions.
As developers seek more sustainable materials and systems, the demand for Alumasc products is set to grow and support future earnings growth—an interesting prospect for 2024.
Vietnam Holding
A standout emerging markets investment trust. Backed by a world-class management team, the trust’s performance speaks for itself.
While we call Vietnam Holding an emerging markets trust, Vietnam is not quite yet classified as an emerging market.
No date is set for when Vietnam will transition from a frontier market to an emerging market. Still, when it does, the Vietnamese growth companies this trust invests in will likely experience major foreign investment inflows as they are added to benchmark indices.
VNH has done very well for investors, and we see no reason why it wouldn’t continue to do so.
National Grid
National Grid is laying the foundations for shareholder returns in decades to come. The electricity generator, transmitter, and distributor is undertaking a major investment programme to boost the UK’s network and bring more renewable power sources online.
National Grid is a vital part of the UK’s energy transition. The company is rightly supported by a favourable regulatory framework and is using this environment to facilitate top and bottom-line growth in the years to come.
National Grid pays a respectable 5.2% dividend. One to tuck away and forget about.
Kodal Minerals
A higher risk prospect for early-stage mining investors. Kodal Minerals has secured financing for the construction of the Bougouni Lithium Project in Southern Mali. The company said it plans to begin production within the next 12 months – an achievement that will unlock value in the lithium miner.
We recently wrote that the company looked fully valued with a £100m market cap. Kodal Minerals’ market cap has since been reduced to £75m and now presents an attractive risk/reward trade-off. Should Kodal Minerals achieve lithium production in Southern Mail, their shares will be worth many times their current value.
Kodal also has a portfolio of gold assets offering diversification and the prospect of additional value creation.
ECR Minerals
We included ECR Minerals in our ‘12 FTSE AIM shares shaping up for a Santa’s rally’, and it hasn’t disappointed.
ECR Minerals has shaken up the management team and brought in new directors to extract value from the company’s portfolio of gold assets in Australia and Asia.
The new management is doing a great job, and we feel this momentum continues well into the new year.
Persimmon
Persimmon will likely be back in the FTSE 100 by this time next year. The culmination of falling inflation, Bank of England rate cuts, and pent-up demand for UK property will boost Persimmons’ sales and encourage equity bulls.
Persimmon is a top-down selection focused on improvement in the UK economy and a more comprehensive rotation back into undervalued UK assets.
The housebuilder expects to have a £300m – £500m cash balance by the end of the financial year – an ample cash pile to invest in the UK property recovery.
Taylor Wimpey
For the same reasons earning Persimmon a place in our selection, Taylor Wimpey secures a spot.
Taylor Wimpey has experienced slowing sales in 2023; we see this bottoming out in 2024.
We feel 2024 is a year to be overweight UK housebuilders, and Barratt Developments could have easily been included in our selection ahead of Taylor Wimpey.
Edinburgh Worldwide Investment Trust
Described as adding some ‘rock and roll’ to your portfolio when we met with Baillie Gifford managers early in 2023, the Edinburgh Worldwide Investment Trust holds exciting growth prospects, including SpaceX, Alnylam Pharmaceuticals, and AeroVironment.
The trust seeks out technologies with the potential to change the world and produce returns many multiples of the original investment. The strategy demands patience but has the potential for outsized returns for long term holders.
The rewards of pursuing such a strategy are demonstrated by the trust’s initial investment in Tesla when it was worth $2 billion. They eventually sold ten years later when the EV maker was worth $1 trillion for a 25x total return.
This is not an investment trust for those with a weak constitution. Managers are prepared to hold high conviction selections during deep drawdowns that can lead to swings in the trust’s NAV.
The trust trades at a 16% discount to NAV.
eEnergy Group
Notwithstanding surging revenues and profits from their clean energy services, eEnergy is attracting strategic investors and has received unsolicited interest for its energy management business, valuing the unit at more than the current market cap.
Should a deal be struck, eEnergy’s £29m market cap will quickly start to look very cheap.
eEnergy’s energy management division accounted for £13.6 million of their £33.2 million revenue in the 12 months to the end of June 2023.
A sale would leave them with the Energy Services unit that generated £19.5m in the same period – and possibly £30m for the sale of the energy management unit.
The market is missing this.
Chelverton UK Dividend Trust
A UK small and mid-cap dividend powerhouse. The trust has an enviable 8.5% dividend yield generated from a high-quality portfolio of UK small and mid-caps, including Belvoir Lettings, Hargreaves Services, Ramsdens Holdings, and Duke Royalty.
Management takes an active approach to managing the discount/premium. The share price trades at a slight premium to NAV, a rarity for UK-focused investment trusts in the current market.
The trust is an excellent option for the UK small-cap recovery and will pay investors a handsome dividend to compensate for any wait for this recovery.
Ocado
Held by the Edinburgh Worldwide Investment Trust, Ocado is London’s best answer to the US’s ‘magnificent seven’ tech stocks. It trades more like Tesla than Sainsbury’s. The interest is not in the company’s premium online grocery retailing unit but in the global solution business being adopted by the world’s largest grocery companies.
In 2023, rumours swirled Amazon was eyeing the unit, yet a bid never materialised. For Amazon to be linked to the solutions unit demonstrates the potential scale and addressable market Ocado’s technology has on its side.
The end of the Fed’s hiking cycle will help support Ocado shares in 2024.
A volatile stock that may require patience.
