You are here: Home - Investing - Experienced Investor - News -

Three ISA stock picks for the contrarian investor

0
Written by: Helal Miah
09/03/2017
With less than a month until the tax-year end and the chance to use up your £15,240 ISA allowance, here are three stock picks for the experienced, yet contrarian investor.

Tullow Oil

Suitable for investors seeking growth and willing to accept higher risk

In the past Tullow Oil had a great exploration track record, but the plunge in the price of oil has changed the company’s and sector’s strategies as exploration no longer takes high priority. However, investors should acknowledge that since oil prices stabilised following the OPEC decision at the back end of 2016, it may give companies such as Tullow Oil the confidence to resume exploration.

As with other small and mid-caps in the oil sector, Tullow Oil took on too much debt to take full advantage of the increased oil prices; therefore, naturally, this stock is highly geared to the underlying price of oil owing to its high debt level making it suitable for the more experienced investor.

The company may not pay a dividend for a while as the focus is to deleverage the balance sheet, reduce costs and improve the free cash flow. However, interested investors should note that a material recovery in the price of oil should see a good rally in the share price.

AVEVA

Suitable for investors seeking growth and willing to accept medium to high risk

AVEVA is one of the world’s leading engineering, design and information management software providers, which supplies its services to a variety of sectors such as mining, oil & gas and other infrastructure-led sectors. These sectors are facing challenging conditions which will no doubt affect them as capital expenditures are falling. However, its potential lies with the fact a number of its customers are deploying more of AVEVA’s products to help generate efficiency gains which are helping to mitigate the wider weakness in the sector.

The group’s latest annual results show full year sales of £201.5m were down 3% from last year and slightly short of the market’s expectations. The firm also reported that pre-tax profits fell by 46% to £29.4m mainly due to one-off exceptional costs related to the aborted Schneider Electric deal and not helped by adverse currency movements.

Nevertheless, the group reported half year sales were up by 3% to £84.3m, assisted by sterling’s fall but the underlying operating numbers were impacted by continued weakness in the energy, commodity markets and marine markets.

Dixons Carphone

Suitable for investors willing to accept medium to high risk

Our last recommendation is consumer electronics retail giant Dixons Carphone. The company is one of the latest victims of the quarterly FTSE Index reshuffle, it will be relegated from the top 100 index later this month following a drop off in its share price as a result of increasing competition within the sector and signs of weakness in the non-food retail sector.

Despite this, an update in January covering the run-up to Christmas beat expectations with a 4% rise in overall like-for-like sales. The company said Black Friday sales were the biggest ever and had been stretched across a week rather than just one day. This strong performance led the group to forecast an increase in full year headline profits to £475m-£495m, up from £447m last year.

Investors should appreciate that the firm’s continuous rapid innovation in consumer technology drives the steady flow of demand for new products and services such as 4G, higher resolution ‘smart’ television and the ‘internet of things’.

We believe the company has encouraging prospects due to the strong management and benefits of scale provided by the merger, but the risk level has increased as the full impact of the Brexit vote on the UK economy and consumer spending is yet to be seen.

Helal Miah is investment research analyst at The Share Centre

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
2232958-money-graph-twenty
ISAs come of age: the top performing sectors over 18 years revealed

As ISAs turn 18, long-term investors in biotech and healthcare have been rewarded with returns of more than 1,300% in...

Close