2 monster stocks in the making I’d buy for 2018

Bilaal Mohamed — Thu, 04 Jan 2018 16:07:04 +0000

Over the course of your stock-picking career you’ll no doubt have studied your fair share of price charts, perhaps splattered with a handful of technical indicators showing moving averages, volume, and so on. Personally, I look at hundreds of charts each week to get a feel for price action and momentum, but that’s because I have a technical background, and also because I’m a little sad.

Missed opportunities

Very often you’ll come across a company that you’d previously dismissed as being too risky, only to discover some years later that the business has morphed into a £1bn monster. As investors we often have to deal with the negative emotions that arise from such missed opportunities, those who missed out on ASOS and Boohoo.Com will know exactly what I’m talking about.

That said, we can’t just go chasing after tomorrow’s hidden winners willy nilly – that would certainly be a recipe for disaster. The trick is to separate the wheat from the chaff, the valuable from the worthless. So today I’m looking at two AIM-listed companies that I believe could turn out to be monster stocks of the future.

Fighting fraud and cybercrime

First up is GB Group (LSE: GBG), the global specialist in identity data intelligence. The Chester-based technology group helps companies and governments fight fraud and cyber crime, specialising in areas such as fraud, risk & compliance, employee screening, and customer & location intelligence.

With both governments and individual companies becoming increasingly wary of fraud and cybercrime in particular, it will perhaps come as no surprise that GBG has more-than-doubled its revenues and pre-tax profits since 2014.

A storming year

The group boasts a strong renewal stream from its existing customer base, while also attracting new, high-profile customers to its growing portfolio. I see a bright future for GBG, with the business well positioned to meet the growing demand for identity data intelligence products.

The downside is that after a storming year, the shares are trading on very high rating of 36 times forward earnings for FY2018, so I would suggest adding it to your watch list to buy on any weakness during the coming months.

Promising cancer drugs

My second offering comes from the orient – Hong Kong to be precise. Hutchison China MediTech (LSE: HCM), better known as Chi-Med. It is an AIM-listed biopharmaceutical company focused on discovering and developing targeted therapies for oncology and immunological diseases for the global market.

Last year, global market sales of oncology drugs grew by 11% to $175.7bn making it the largest treatment area in the global pharmaceutical market, with a 17% market share. But in China, despite being home to 8.1m cancer patients, or about 20%-30% of those in the world, market sales of oncology drugs were just $7.3bn, or around 4% of the global market. This clearly indicates a huge opportunity for Chi-Med in its domestic market, as well as overseas.

Despite rapidly-growing revenues, the company is not yet profitable as funds continue to be pumped into research and development. But with a number of promising cancer drugs in the pipeline this won’t be the case for very long. The share price is riding high after more-than-doubling to £58 in the last 12 months alone, so this is another one to add to your watch list in 2018.

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. The Motley Fool UK has recommended boohoo.com. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

What are the safest places to store your money post-Brexit?

Royston Wild — Mon, 27 Jun 2016 15:27:21 +0000

The perils of share investing have been laid bare by the severe stock market movements witnessed in recent days.

The impact of wide risk aversion — combined with a failure of traders to factor in a possible Brexit — has seen the FTSE 100 lose 6% of its value since Friday’s open. The index is now below 6,000 points once again.

And the political and economic malaise in the coming weeks and months threatens to keep investors on their toes for some time yet.

Having said that, we at The Motley Fool believe that stock markets are still the best destination for good returns, given the pitifully low interest rates offered by cash ISAs, for example. In this article I lay out some of the key points investors must consider in order to keep making splendid returns.

Go for brand power

In times of significant economic hardship — and consequent pressure on consumers’ wallets — the importance of brand power cannot be overstated.

Conventional thinking would suggest that shoppers pick the cheapest option available during such periods. But this is not always the case. Indeed, a combination of shrewd marketing and product innovation has proven to keep sales of popular labels of many FTSE companies — from ice cream and headache pills through to cigarettes — ticking higher.

Consequently, I reckon the fortunes of PZ Cussons (LSE: PZC) — manufacturer of brands like Imperial Leather, Original Source and Five:am organic yoghurts — will keep on rising.

New markets

On top of this, PZ Cussons also offers terrific emerging market exposure, thanks to its wide presence across Africa and Asia, a quality that significantly reduces its direct exposure to the impact of Brexit. And although these markets are cooling down, the growth rates here are still a lot stronger than those of the West. And I believe rising wealth levels here should blast consumer spending levels higher in the years ahead.

Indeed, I have previously tipped healthcare play Hutchison China MediTech (LSE: HCM) on the basis of its determination to become the largest pharmaceuticals developer in the Asian powerhouse.

But this is not the only hot developing market play out there — telecoms giant Vodafone and beverages play Diageo also offer considerable exposure to emerging regions.

Pounding higher?

And some British-based exporters may actually gain from the pound’s fall following the UK’s vote to leave the European Union.

Just today sterling sank to fresh lows below $1.32, not seen since 1985. And HSBC expects the pound to slip as low as $1.20 by the end of the year.

This should benefit many British companies that export their goods abroad. Indeed, UBS estimates that profits over at defence giant Meggitt (LSE: MGGT) and diversified engineer GKN (LSE: GKN) benefit by 5% for every 10% fall in the value of sterling against the US dollar.

The post What are the safest places to store your money post-Brexit? appeared first on The Twelfth Magpie.