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Hot stocks for 2013

Three companies near the bottom of NZX50 companies for performance this year are being plumped as stocks to watch in 2013.

Broking firms Hamilton Hindin Greene, Craigs Investment Partners and Forsyth Barr, as well as fund manager Brook Asset Management, provided NBR ONLINEwith their top three picks for 2013.

Three companies have emerged as favourites – PGG Wrightson, Mainfreight and Fisher & Paykel Healthcare.

That is despite their returns to shareholders being in the bottom 15 of NZX50 companies, as compiled by NZX Data.

According to the NZX Data figures (see RAW DATA below), all but four NZX50 companies had positive total shareholder returns between January 1 and December 7 – which includes share price fluctuations and dividends paid.

The standout was Fisher & Paykel Appliances, fuelled by Chinese firm Haier's successful takeover. However, the company was delisted in November and replaced in the NZX50 by Steel & Tube Holdings.

Hamilton Hindin Greene director Grant Williamson says a strong year for the sharemarket makes it harder to pick winners in 2013.

"Quite a few of them look fully priced. We're looking at those stocks that have good recovery prospects; stocks that haven't performed that well in 2012."

The entire New Zealand sharemarket had a dividend yield close to 6% this year, say Craigs Investment Partners head of institutional equities Geoff Zame and head of private wealth research Mark Lister.

"While the economy might remain sluggish, earnings growth for the NZX50 is forecast to be close to 10% next year."

Brook Asset Management's chief investment officer Andrew South says he is not relying on 2012 performance as yardstick for 2013.

"We're looking at where these companies are positioned going forward."

A similar brokers’ tipping exercise last year shows the benefit of a diversified portfolio.

McDouall Stuart, which picked Diligent, was dragged down by Cue Energy, while Macquarie Securities’ gains from Pumpkin Patch were undone by Chorus and Transpacific Industries.

The average performance of the seven firms was 35% returns, highlighting the strength of the sharemarket.

The winner was Forsyth Barr with an average of 69.4% return, from Chorus, F&P Appliances, Fletcher Building, Ryman Healthcare and Sky Network Television.

2013 stocks to watch

 

HAMILTON HINDIN GREENE

  • PGG Wrightson
  • Chorus
  • Tower
     

FORSYTH BARR

  • Mainfreight
  • PGG Wrightson
  • Sky City
     

CRAIGS INVESTMENT PARTNERS

  • Fisher & Paykel Healthcare
  • Ryman Healthcare
  • Diligent Board Member Services
     

BROOK ASSET MANAGEMENT

  • Fisher & Paykel Healthcare
  • Summerset Group Holdings
  • Mainfreight

DISCLAIMER: Information in relation to these stocks to watch is intended as general information and not financial advice. Readers should obtain professional advice before making investment decisions. Copies of disclosure statements of NZX adviser firms mentioned in this article can be obtained by contacting the firms.

For more details see this week's National Business Review Print edition.

dwilliams@nbr.co.nz

RAW DATA: NZX50 stocks ranked by total shareholder return for 2012

More by David Williams

Comments and questions
11

Hey, NBR, I think these stock picks are reasonable. But you would do your readers a service if you also took the time to review the accuracy of the picks that these companies made at the same time last year.

How accurate were the pics for 2012?

And how did they do with their picks in 2012? Did they beat random returns?

BUY BUY BUY!

Just google "brokers picks 2012" I found several references without a problem. All the brokers picked Chorus, which has under-performed recently but probably that not bad when you add back the hefty dividends paid. Apart from that I'd say they've all done quite nicely from the others, like FPA (400%), Ryman, Diligent, etc.

One of these bright sparks advised me not to buy Ports of Tauranga at $9.18 at the time, because their analysts considered the company would only put on $1 per share over the next five years. Today they are $13.

If these guys can accurately predict, then they would be rich and don't have to come and do these sort of forecasting.

PGW share that is a easy pick cant go any lower.

Actually, it could go to zero based on the thirst for debt this company had only 5 short years ago.

It is unlikely to do so, because the new brooms at PGW decided to stop using hubris as a company strategy, and instead having an agricultural supply and seeds research business that is focused on the basics.

Investing in PGW now represents a courageous but logical decision based on believing the company has debt under control and is focused on growing sales organically instead of acquiring other businesses.

And none of them picked Diligent when it was in the low 20 cent range. It actually went as low as 8 cents I recall. If they had come out then and suggested a buy, then they would deserve praise. Picking diligent at $4-70 is a no-brainer and my pet lamb could have done it.

Small point of order, Diligent was $1.90 12 months ago when the brokers picked it for 2012, so it isn't a $4.70 - that is the price now.