Top stocks for 2019
Andy Ross: Diageo
Given 2018 was a tough year for investors in the UK, my top stock for 2019 is a defensive company that managed to increase its share price last year.
Diageo(LSE: DGE) is not reliant on the UK for sales as it’s a global business, operating in over 180 countries with a portfolio of over 200 drink brands. Given Brexit uncertainty is likely to drag on well beyond the March deadline, I think this global reach will be popular with investors this year. I reckon Diageo should stand out in 2019, and so it seems do other investors as the P/E of 23 is quite hefty.
Andy Ross does not own shares of Diageo.
Kevin Godbold: Britvic
We face a lot of uncertainty heading into 2019 and I’m putting my faith in a business with sound quality indicators operating in a defensive industry. My pick for the year is soft drinks provider Britvic (LSE: BVIC), which has a record of steady annual growth in revenue, earnings, operating cash flow and the dividend.
City analysts predict decent rises in the dividend payment for 2019 and 2020, with the payments covered almost twice by earnings. The share price has been consolidating and the valuation is modest. I think conditions are ripe for a share-price advance during the year.
Kevin Godbold owns shares in Britvic.
Rupert Hargreaves: IG Group
If 2019 is going to be anything like 2018, investors are in for a rough ride. With this being the case, I’m picking IG Group(LSE: IGG) as my top stock for 2019.
As one of the world’s largest online trading businesses, IG should thrive in volatile markets. Even though the group is facing headwinds in the form of regulations, which will hit the profitability at the group’s spread betting and contracts for difference business, I reckon IG’s diversification and international footprint will allow it to continue to thrive for many years.
Today the shares are trading at what I would call a bargain valuation of just 11.4 times forward earnings and offer a dividend yield of 6.9%.
Rupert Hargreaves does not own shares in IG Group.
Tezcan Gecgil: GlaxoSmithKline
I expect 2019 to be a memorable year for big pharma and healthcare stocks. Due to its rock-solid dividend and growth potential, my top choice is GlaxoSmithKline(LSE: GSK).
Despite management’s efforts to boost the company’s financial strength, since 2014 the shares have not done much for investors. However, I am now excited about the recent merger announcement between GSK and its US counterpart Pfizer, creating a leader in over-the-counter products. They will spin off their consumer healthcare brands in a new venture of which GSK will own 68% and contribute with its top brands, including Theraflu, Sensodyne and Voltaren. Watch out for this winner.
Tezcan Gecgil does not own shares in GlaxoSmithKline.
Royston Wild: Begbies Traynor Group
Begbies Traynor (LSE: BEG) may not be the flavour of the month right now, its share price diving in response to late December’s half-year trading statement.
But as the UK economy struggles in response to the drawn-out Brexit saga, an event that threatens to persist well into the year, I reckon it’s the perfect stock to buy for 2019.
The AIM-listed business recently announced a 40% pre-tax profit drop between May and October, to £0.6m, but this was due to the impact of prior acquisitions. In truth, trading remains strong – revenues were up 8% in the period, with the business reporting “increased activity levels across both operating divisions”. And momentum is likely to remain robust given the economic backcloth which is already driving solvency numbers sky high.
Right now Begbies Traynor trades on a cheap forward P/E ratio of 14.6 times and carries a 4% corresponding dividend yield. This, in my opinion, makes it a brilliant buy.
Royston Wild does not own shares in Begbies Traynor Group.
Edward Sheldon: Unilever
Economic and political uncertainty is elevated right now, and I believe there’s a good chance this uncertainty will persist throughout the year. As such, I’m picking ‘defensive’ stock Unilever(LSE: ULVR) as my top stock for 2019.
Unilever owns a fantastic portfolio of food and drink, homecare and personal care brands, and its products are used by over 2bn people across the world every day. Whether the global economy is expanding or contracting, you can be sure people will still buy Unilever’s products such as Dove deodorant, Domestos cleaner or PG Tips tea.
While Unilever’s price-to-earnings (P/E) ratio is higher than the average FTSE 100 P/E, I think it’s worth paying a little more for the stock, as the company has a number of high-quality attributes such as consistent cash flows, a high return on equity and a great dividend growth track record.
Edward Sheldon owns shares in Unilever
Alan Oscroft: Royal Dutch Shell
A fall once again in the Royal Dutch Shell(LSE: RDSB) share price has given us a second bite at my current favourite investment. The FTSE 100’s biggest company is now on well-covered forecast dividend yields in excess of 6%.
Shell kept its payments going throughout the oil price crisis (and you could have secured a yield of more than 8% in early 2016), and it has not once cut its dividend since the end of World War II. I really don’t see that track record coming to an end any time soon.
That makes Shell my top pick for 2019 and well beyond.
Alan Oscroft does not own shares of Royal Dutch Shell at the time of publication.
Roland Head: Mondi
The most profitable investments aren’t always the most glamourous businesses. I believe that’s true of FTSE 100 cardboard packaging group Mondi (LSE: MNDI). The share price of this £8bn firm has doubled over the last five years, but I think there’s more to come.
The recent market sell-off has left the stock trading on just 9.5 times 2019 forecast earnings, with a dividend yield of 4.3%. In my view that’s too cheap for a company with an operating profit margin of nearly 14%, and a track record of growth and innovation.
Mondi is on my short list of shares to buy for 2019.
Roland Head does not own shares in Mondi.
G A Chester: Polymetal International
I tipped mid-cap gold miner Polymetal International (LSE: POLY)this time last year. A weakening gold price for much of the year didn’t help its cause, and while it outperformed the FTSE 250’s 15.6% fall, a decline of 10.7% was hardly cause for celebration. However, I’m sticking with the stock as my top buy for 2019.
Its earnings are forecast to increase 20% this year, giving a P/E of 10 and a PEG ratio of 0.5. This valuation is cheap and suggests great scope for a strong rise in the share price. There’s the added attraction of a prospective 4.8% dividend yield.
G A Chester has no position in Polymetal International.
Paul Summers: Diageo
Reflecting my rather cautious view on the UK economy and stocks in general, my top pick for the year is drinks giant Diageo(LSE: DGE).
Most people tend to continue consuming alcohol in troubled times, regarding it as an affordable luxury. With ‘sticky’ brands including Smirnoff, Guinness and Baileys, the £66bn cap is surely one of the best defensive plays in the FTSE 100.
But growth could also be on the cards. In addition to its potential in emerging markets, there are rumours it could soon enter the lucrative cannabis space by adding marijuana-infused drinks to its portfolio.
Trading for 22 times earnings, Diageo’s share price is unlikely to skyrocket over 2019 but its truly global reach should ensure that any Brexit-related shenanigans have minimal impact on its bottom line.
Paul Summers does not own shares of Diageo.
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The Motley Fool UK owns shares of and has recommended Britvic, GlaxoSmithKline, and Unilever. The Motley Fool UK has recommended Diageo. 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.
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