We take a look at our fun predictions of twelve months ago as the Year of the Dog makes way for the Year of the Pig.
It's that time of year when millions of Chinese children squeal with delight as they welcome in the Lunar New Year. My own children have been helping to prepare our home in readiness for, what some reckon to be, the most intelligent animal in the Chinese zodiac - The Pig.
Around this time last year, I made a number of "predictions" about how I thought the Year of the Dog would pan out for some companies. In my view, the trendy Dog augured well for companies involved in the fashion industry, and neither ASOS
(LSE: ASC)
nor House of Fraser disappointed. As it happens, ASOS is up 40% and House of Fraser surged 30% after it agreed to be bought by Icelandic retailer Baugur.
I also reckoned that demand for sports and other energetic pursuits may help Millets owner Blacks Leisure
(LSE: BSLA)
and sports clothing retailer John David
(LSE: JD.)
shine. Unfortunately, Blacks Leisure tumbled 44% on severe price competition, but John David rallied 67% thanks to healthy demand for premium sports clothing. Meanwhile, World Cup fever lifted Goals Soccer Centres
(LSE: GOAL)
100%, and canine-friendly holiday village Center Parcs gained 14% after it agreed to be acquired by private equity group Blackstone.
Finally, I suggested that the ever-hungry Dog may prove a boon for Clapham House
(LSE: CPH)
and Gondola. The former has risen 67%, and pizza restaurant chain Gondola sailed ahead 9% after private equity group Cinven acquired it.
It seems that guided by the Dog, last year's share picks have outperformed the market by a wide margin. The eight picks have jumped around 35% compared a 12% rise in the FTSE.
So what about the Year of the Pig?
Many Chinese consider the Pig to be a home-loving creature. Consequently, it may bode well for the property market again. Despite threats of higher interest rates the housing market may continue to flourish as demand for houses outstrip supply. This may point to further gains for housebuilders such as Persimmon
(LSE: PSN)
and Barratt Development
(LSE: BDEV)
.
Estate agents may benefit from continued strength in the housing market, with Rightmove
(LSE: RMV)
and Countrywide
(LSE: CWD)
likely beneficiaries. Countrywide is already on the go following expressions of interest, though a formal approach has yet to be made.
A healthy housing market may also augur well for builders' merchants. Interesting picks here may include Travis Perkins
(LSE: TPK)
, which owns DIY stores Wicks, and plumbers' merchant Wolseley
(LSE: WOS)
, which owns the 600-strong Plumb Center chain. BSS
(LSE: BTSM)
may be another plumbers' merchant worth tapping into. The company has benefited from increased government spending, which has underpinned parts of the construction market.
A strong housing market may also bode well for mortgage lenders. Consequently, banks may do well in the Year of the Pig. Some of the major players include HBOS
(LSE: HBOS)
, HSBC
(LSE: HSBA)
and Alliance & Leicester
(LSE: AL.)
. Another bank worth watching is Northern Rock
(LSE: NRK)
, which is one of the biggest players in the buy-to-let market. It recently said record lending led to a solid 27% rise in annual profits.
We will revisit these "predictions" in twelve months. It goes without saying that financial astrology is only meant to be a bit of fun, so we should never forget that nothing can ever replace proper in-depth investigation when you are investing with real money.
