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Christmas stock picks

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Written by:
01/12/2014
Graham Spooner, investment research analyst at The Share Centre, picks five stocks from our ‘buy’ list that could benefit over the Christmas trading period.

Diageo

As people look forward to a festive tipple, beverages company Diageo could benefit. The group, whose brand names include Bailey’s, Gordons, Guiness and Smirnoff, could see sales rise as people embrace the season to be jolly and celebrate with family, colleagues and friends.

A trading update in October covering Q1 showed a 1.5 per cent drop in sales, which was in line with expectations. Nevertheless, the company said it expects full-year top line growth to improve. The shares are trading on a 2015 PE of 20 and a dividend yield of 2.8 per cent, which are both good relative to its peers Remy Cointreau and Pernod Ricard.

Booker

As the economic outlook continues to improve, more families could decide to venture out for their Christmas meal. Consequently, cash and carry operator Booker Group could benefit from an increase in demand as restaurants prepare and stock their kitchens with turkey and sprouts.

The company, which also serves over 400,000 caterers, has delivered some strong numbers this year against a tough trading environment. The group’s shares are trading on a 2015 PE of 22 times which is above average in the sector, but the company has delivered a strong performance since Charles Wilson CEO took over. There is a dividend yield of 2.4 per cent and this is likely be boosted in 2015 by a return of capital to shareholders.

Marston’s

For many people, a trip to the local pub will be on the cards this Christmas so Marston’s, a brewing and pub retailing company, will hope to benefit as people get in to the festive spirit. Furthermore, the group, which is very dependent on the weather, will hope that the wintery showers stay away to allow more people to come through its doors.

Marston’s recently reported that its full year figures were in line with market expectations. The group has been transforming its pubs assets by developing franchise style pubs which now generate roughly 75 per cent of the company’s profits and give it better control over the retail offer. The shares are trading on a forward PE of 11.3 and the prospective dividend yield of 4.9 per cent is very good. The strengthening UK economy alongside the fact that disposal proceeds are being recycled into higher returning new pubs could provide a sales boost for the company.

Burberry

December is the month where demand for Christmas jumpers, party outfits and gifts is high, so the high end British fashion giant will hope to capitalise with its luxury goods. Its seasonal advert, which includes David Beckham’s son Brooklyn, has been well received and the group will hope this entices more customers.

Under the new CEO, the company has had a relatively smooth transition with the first half 2015 results showing some promise. Burberry still expects new store openings to contribute to sales growth and believes it is well positioned to make the most of the festive period.

Sainsbury’s

The supermarkets are already fighting for our custom in the run up to the sector’s busiest trading period and Sainsbury’s will be hoping to maintain its market share. By selling a wide range of food, decorations, gifts and seasonal clothing, the group could have a merrier Christmas than feared.

Sainsbury’s has teamed up with Danish discounter Netto to open up a number of stores in the UK to help it combat the challenges it is facing from the discount chains Aldi and Lidl. It also announced a clearer way of setting and matches prices, as well as lowering prices on thousands of products. Valuation looks interesting, trading on a forward P/E of 9 times and there is a dividend yield of 5.1 per cent.

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