Some smart calls by our overseas investing expert would have netted handsome profits for investors in 2021. Rodney Hobson talks us through some of the past year’s stock tips that went well and some that didn’t.
Rodney Hobson is an experienced financial writer and commentator who has held senior editorial positions on publications and websites in the UK and Asia, including Business News Editor on The Times and Editor of Shares magazine. He speaks at investment shows, including the London Investor Show, and on cruise ships. His investment books include Shares Made Simple, the best-selling beginner's guide to the stock market. He is qualified as a representative under the Financial Services Act.
Down at the start and up in the middle. The seesaw of stock market investing this year followed a similar if less dramatic pattern to 2020. Although markets have come off the boil with the latest wave of Covid-19, most investors should still be ahead for the year as a whole.
In such a year, it was impossible to ignore pharmaceuticals, and two that caught my eye early on were Pfizer (NYSE:PFE) and AbbVie (NYSE:ABBV). I repeated advice in previous years to buy Pfizer below $35 and, despite an alarming dip to $32 in March, the shares have shot away to $59, easily beating my contention that $40 was well within reach. Stay in and enjoy the ride for as long as Covid-19 persists.
The best chance to buy AbbVie had already gone but I did say latecomers could consider coming in below $110. The shares have moved alarmingly either side of that level but at around $130 it is surely time to sell.
There were other routes to turning the pandemic to advantage and one was Dropbox (NASDAQ:DBX), which offers cloud storage and content management to help with working from home. The shares were around $20 in January and have been as high as $28, but they are now finding a floor back down around $22. This is another chance to buy, but this time with the proviso that investors should not hang around if the shares hit a peak and start falling back.
I featured smaller but similarly named Box (NYSE:BOX) at the same time with a buy recommendation below $20 with a target of $23. This proved the better buy, staying solidly above $20 since the beginning of March and settling around $26. The shares are up 50% over the past three years and as the upward trend should continue into the next year it would be wise for shareholders to hang on.
- Peter Spiller: the biggest risks for markets in 2022
- Should you keep taking profits in the tech titans?
- Want to buy and sell international shares? It’s easy to do. Here’s how
- Subscribe to the ii YouTube channel for our latest New Year share tips and fund manager interviews
Energy companies seemed a good idea for anyone’s portfolio and I suggested Evergy (NYSE:EVRG) at $64 in April, with a yield at 3.3% as an attraction. The shares have put in a solid if slightly disappointing performance and, although they have been as high as $69 since, they are now at $66.50, putting the yield slightly lower at 3.26%.
There looks to be a solid floor at $62 and the shares are still a buy below the recent peak, although there could be further weakness before the latest wave of Covid-19 passes. I am still optimistic that the high of $73 set last January will be reached again next year.
Larger rival Duke Energy (NYSE:DUK), which I have tipped three times in the past, remains above $100, well up on my tip prices. If you are in, hold on and enjoy the yield of 3.78%.
Alongside power supplies, we rely on communications. So when famous investor Warren Buffett of Berkshire Hathaway (NYSE:BRK.B) bought heavily into Verizon Communications (NYSE:VZ), the largest wireless carrier in the US, early in the year, it seemed sensible to consider following suit at $56.
Alas, this was not one of Buffett’s (or my) better judgements. The shares did indeed hit $59.50 but, instead of ploughing on through $60 as expected, they went into a tailspin to $50. They have nudged back up to $53 and, at the risk of being wrong twice, I maintain that they are now an even better buy. The juicy yield, now at 4.74%, continues to offer compensation for the disappointing share price performance.
- Bill Ackman: hot sectors and the economy in 2022
- Ian Heslop's outlook for the US stock market in 2022
- Friends & Family: ii customers can give up to 5 people a free subscription to ii, for just £5 a month extra. Learn more
On the basis that we have to eat, I suggested looking at several food manufacturers in April, including Mondelez (NASDAQ:MDLZ) below $60, Kraft (NASDAQ:KHC) at $40 and Hershey (NYSE:HSY) below its $160 ceiling.
It has been a nervous year for Mondelez, which has twice peaked at $65 and bottomed at $58. This is still a buy despite being near the year’s high. The yield is okay though not exciting at 2%. Kraft quickly ran up to $44.50 and was looking really good, but a subsequent slip to $33 was somewhat alarming. It looks to be ending the year going in the right direction at $35.50 and should be seen as a strong buy with a yield of 4.51%.
Hershey smashed through that $160 ceiling and raced on to $190. Shareholders have no reason to sell yet but this is no longer an obvious buy. Those who missed the chance to get in before the surge could watch for any unjustified weakening in the share price.
Champagne is somewhat less of a necessity and there has been little to drink to this year. Somewhat optimistically, in February I said buy Laurent-Perrier (EURONEXT:LPE) up to €80. Cheers! The shares have settled above $92 since July and are trying to hold on above $100, where investors should consider taking profits.
I said not to pay more than €21 for Lanson-BCC (EURONEXT:ALLAN) and there was plenty of opportunity to do so before the shares started to race away in March. Again, there is a chance now to take profits at €28.
Carmakers have been seriously challenged, with sales down during the pandemic, and they now face the considerable cost of developing electric and hybrid vehicles. I suggested that Toyota Motor (NYSE:TM), already well up on my original tip price, was still worth buying at $156 in April, and anyone who did so will be happy with the current $184.
The yield is 2.47%, which is probably worth holding on for, and the price/earnings (PE) ratio is an undemanding 9.4, but the shares have gone sideways since the start of June and may well continue to do so.
- The best and worst fund and investment trust sectors of 2021
- Take control of your retirement planning with our award-winning, low-cost Self-Invested Personal Pension (SIPP)
You do well if you never put a foot wrong, even in a good year, and athletics clothing makers adidas AG (XETRA:ADS) and Nike (NYSE:NKE) ran all over the place. In April I said Nike was still worth considering up to $138 and Adidas up to €285.
That looked great when Adidas hit €338 in August but not so clever as the shares were clinging on at €252 in December. However, at least Nike did the decent thing by peaking at $177 in November and despite easing back it has stuck above $160.
Both have demanding PEs and tiny yields so do not look like obvious buys at this stage. Hold on and await the next sales and profit figures before taking any action.
Note: Share prices and yields are based on closing prices on 17 December.
Rodney Hobson is a freelance contributor and not a direct employee of interactive investor.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.
We use a combination of fundamental and technical analysis in forming our view as to the valuation and prospects of an investment. Where relevant we have set out those particular matters we think are important in the above article, but further detail can be found here.
Please note that our article on this investment should not be considered to be a regular publication.
Details of all recommendations issued by ii during the previous 12-month period can be found here.
ii adheres to a strict code of conduct. Contributors may hold shares or have other interests in companies included in these portfolios, which could create a conflict of interests. Contributors intending to write about any financial instruments in which they have an interest are required to disclose such interest to ii and in the article itself. ii will at all times consider whether such interest impairs the objectivity of the recommendation.
In addition, individuals involved in the production of investment articles are subject to a personal account dealing restriction, which prevents them from placing a transaction in the specified instrument(s) for a period before and for five working days after such publication. This is to avoid personal interests conflicting with the interests of the recipients of those investment articles.