Interactive Investor

How my share tips performed in 2023 and what I’d do with them now

A turbulent year has created plenty of opportunities to make money, and overseas investing expert Rodney Hobson has made some great calls. Here, he runs through some of his winners and losers, and explains his current thinking.

28th December 2023 08:41

by Rodney Hobson from interactive investor

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This has been the year for American tech stocks. Not my speciality, I’m afraid. The rest of the market has been more of a mixed picture, but over the past year I have endeavoured to identify solid dividend-paying prospects for long-term investors and opportunities for more active traders.

Every portfolio should have a bank in it. They are the first companies to produce figures in any round of reporting and they tend to set the tone for the rest. This year they have benefited from the increase in interest rates widening the spread between what they charge borrowers and what they pay to savers, but they have also suffered from a dearth of deal making, where they charge bidders and target companies for expensive advice.

In January I rated JPMorgan Chase & Co (NYSE:JPM) as a buy below $130 and Bank of America (NYSE:BAC) below $38. Patience was rewarded when JPMorgan dropped to $126. The shares have since hit $165. Bank of America is struggling at $33, but shareholders have at least had the benefit of a 2.7% yield and should hold on. I have repeated my buy advice at lower levels during the year and stick to that stance.

It has been a similar story at Citigroup Inc (NYSE:C) where the yield is even better. The pullback in the share price continued further than I expected – trends often go on longer than you anticipate – but the shares are once again rising. That trend could also go on for some time. I’ve flipflopped over Wells Fargo & Co (NYSE:WFC), sometimes getting it wrong but finally proving right in October with a buy recommendation at $42 against a current price around $50. I really wouldn’t want to call it now. I’ll leave that to braver souls. Suffice to say that legacy issues which held the bank back do seem to have been resolved.

Next year, the retail banks are likely to be hit by a rise in defaults by borrowers as interest rates remain comparatively high, but deal making is likely to improve.

I always stress that oil companies are not for green investors and they are a volatile pick as the swings in the price of crude is reflected in fluctuating share prices. I took a risk in suggesting buying Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM) in February despite an easing of oil prices since Russia’s invasion of Ukraine a year earlier, and the conflict in Gaza since has not fed through into a further boost. 

Both shares have fallen back but seem to be bottoming out. Both have good yields and merit a buy for long-term investors who are willing to hold their nerve.

I have favoured both Coca-Cola Co (NYSE:KO) and rival soft drinks maker PepsiCo Inc (NASDAQ:PEP) as both have internationally regarded brands.

My preference for several years has been Coca-Cola. Despite an unjustified alarming dip to $50 in October they are still a buy at the current level around $60.

Pepsi has had a surprisingly volatile ride but is now back to the level it enjoyed in February when I rated it a solid hold. Short-term investors had a chance to take good profits in the summer, but we are now back into buy territory.

Coca-Cola truck at Christmastime 600

Healthcare group Johnson & Johnson (NYSE:JNJ) has been another disappointment even though there has been some pick-up since October. I suggested buying below $170 and the shares have disappointingly slipped further to $155 as litigation over its baby powder product has continued to cast a shadow. I still rate this company a buy, even more so now the shares are cheaper and there has been a decent, increased dividend. This attractive well-run company will come back into favour.

In telecoms I preferred Verizon Communications Inc (NYSE:VZ) at $41.50 to AT&T Inc (NYSE:T) just below $20. Verizon has been as low as $31 but is back on the road to recovery and I still think the pessimists are wrong at just below $40. At least I was right to warn against AT&T, which hit $13.50 in July. Well done if you spotted the chance to get in then. This is now a buy at $16 with further upside to come.

While the travel sector had begun to recover from the pandemic I warned that caution was required, as several companies were trading on ludicrously high price/earning (PE) ratios. I said Booking Holdings Inc (NASDAQ:BKNG), was strictly for active traders, but longer-term investors will be glad if they bought at  $2,550 as the shares are now trying to break above $3,500. Consider taking profits as the PE has become challenging at 24.

I warned TripAdvisor Inc (NASDAQ:TRIP) shareholders to sell at $18 and that looked justified when the shares continued their fall to $15. Don’t worry if you held on though, as they are back up around $19. They could, however, find this level to be a ceiling so again consider selling.

Expedia Group Inc (NASDAQ:EXPE) did, as I suggested, bottom out at $90 but it took most of the year before they started to rise. At $145 they could have further to go but if I were a shareholder I would be looking for a chance to take profits.

I rated Airbnb (NASDAQ:ABNB) as the best of the bunch at $116 and they are now around $146. The ceiling could be $153.

I was far too pessimistic in April regarding the housing sector, where shares had risen on hopes that the increase in interest rates was coming to an end. As I suggested, the rates continued to rise but so did the shares in housebuilders, as the US jobs market held up remarkably well so there has not been the sort of defaulting on mortgages that we saw in 2008.

I advised waiting at D.R. Horton Inc (NYSE:DHI) until the shares fell to $70. I am still waiting. Instead, the shares are double that level. The same applies to Lennar (NYSE:LEN). Taylor Morrison Home (NYSE:TMHC) and KB Home (NYSE:KBH) have also outperformed. If you are thinking of buying in now at elevated levels you are braver than I am. I think a correction is overdue.

International companies tend to fare better when their home base is doing well, I suggested, and pointed to hotels group Marriott International Inc Class A (NASDAQ:MAR) as an example as it recovered from the pandemic closures. There was a chance to follow my recommendation to buy below $170 before the end of May.

I remarked that “the $180 ceiling is there to be broken” and it did not take long for that to happen. The current price is just above £220 and, although the yield is less than 1%, I believe the upward trend will continue so hold on while travel continues to come back into fashion.

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.

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