Best Bargains for 2020, Money Observer, January issue
Jennifer Hill
With the mantra ‘buy low, sell high’ firmly in mind, Jennifer Hill makes a solid argument for a shift to buying value
Value investing is set for a comeback in 2020, after a decade in the doldrums. While recession risk appears to have subsided, sentiment remains fragile and there is a solid argument for a shift to buying value.
‘Value is already pricing in a downturn – and growth stocks trade close to all-time highs,’ says Lee Wild, head of equity strategy at interactive investor. Precisely timing the shift is impossible, though and Wild concedes growth stocks may have further to climb if macro events such as trade talks and interest rate policies go their way.
Whatever materialises, there is a lot to be gained in the long term from going against the grain. Some of the world’s most successful investors – Sir John Templeton, George Soros and Warren Buffett being among them – were or are contrarians.
With that in mind we have asked a range of independent investment experts to pinpoint the most unloved and best-value regions and sectors worldwide.
UK
For beaten-up value stocks and a region out of favour, look to the UK. Companies with a domestic focus have suffered most from Brexit – which means smaller companies…
Europe
While Brexit has impacted UK stocks, the European stock market has also felt the brunt, compounded by its mini trade war with the US, diesel car scandal and negative interest rates making a huge hole in the profitability of its banks…
Asia
Asian equities have lagged since the onset of the US-China trade war…
Specialist sectors
The biotechnology sector benefits from structural growth trends – the ageing populating and increasing US drug approvals – but has recently underperformed the healthcare sector and broader equity market amid US election uncertainty…
QuotedData highlights private equity as an unloved sector – discounts have widened despite reasonably respectable underlying performance. Research director James Carthew highlights Oakley Capital as an example; its net asset value is up 23% in a year but its shares are trading at a 25% discount.
[NB when we gave Money Observer this comment, Oakley Capital was trading around 235p, today they are 274p and a 12% discount.]