Before the start of a new year, I find it useful to spend some time putting together a wishlist of the stocks I’d like to buy (or buy more of) in the year ahead. These are not stocks that I will rush out to buy immediately. Instead, I’ll wait patiently for attractive entry points, in order to increase my chances of generating solid, long-term returns.
Today, I’m providing readers with a look at my wishlist for 2019. These are the stocks I’d love to buy next year.
Unilever is already the top stock in my portfolio. I see it as a ‘sleep-well-at-night’ type stock, and I also like the emerging markets growth story. I’m not too concerned by the argument that ‘bond proxies’ will suffer as interest rates rise, because Unilever has a fantastic dividend growth track record. In 2019, I’d like to buy more ULVR. However, I’d prefer to buy the shares under 4,000p, with a yield of around 3.5%.
Shares in alcoholic beverage champion Diageo held up well in 2018. With tobacco stocks out of favour, it was one of the top ‘defensive’ stocks that investors turned to as uncertainty increased. I already have a small position in Diageo and I’m keen to boost this, as I like the emerging markets growth story. However, the shares are just a little too pricey for me right now and the yield is quite low. So I’ll be waiting patiently for a pullback.
Health and hygiene specialist Reckitt Benckiser is another stock that I have my eye on. I think this is one I might buy sooner rather than later, as its share price has experienced weakness in the last 18 months. Right now, I don’t think Reckitt’s valuation looks overly stretched. However, I’m hoping that with a little bit of market volatility, I can pick it up even cheaper, with a yield of 3% or higher.
Smith & Nephew
Joint replacement group Smith & Nephew is another company I’d like to own. To my mind, it looks to be a good stock to capitalise on one of the most dominant themes across the globe today – the world’s ageing population. I’m keen to get SN into my portfolio. Yet right now, its dividend yield of 1.9% looks a little underwhelming. As such, I’m happy to wait for a more attractive entry point.
Hargreaves Lansdown is a stock I’m quite bullish on. It operates the UK’s largest investment platform and its growth in recent years has been impressive. Given that stock markets tend to rise over time, I think Hargreaves looks well positioned to keep growing in the years ahead. HL is certainly not a cheap stock, as its P/E is 28.4. Yet when you consider the company’s earnings and dividend growth, I think it deserves a high valuation. I’ll be looking to buy more on market weakness.
Lastly, another stock that I’d like to buy at the right price is Croda International. It makes speciality chemicals for a number of industries including cosmetics, healthcare, and farming. Croda screens up as a high-quality stock. It generates a high return on equity, has low debt, and it has recorded 19 consecutive dividend increases. The stock’s valuation is a little high for me right now, so I’m hoping 2019 will throw up some more attractive entry points.
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Edward Sheldon owns shares in Unilever, Diageo and Hargreaves Lansdown. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Diageo and Hargreaves Lansdown. 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.