Shares You Should Have Bought This Year
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At the end of several previous years -- most recently 2005 -- we've looked at which shares have performed most strongly during the year and reflected about what might have been.
I think it's time to resurrect that tradition. So here goes....
It's been a dramatic year with vibrant stock markets in the first half followed by the credit crunch and the Northern Rock crisis dominating the headlines from late summer onwards. But surprisingly, the market as a whole has pretty much moved sideways over the year.
The FTSE 100 index, which comprises the largest companies on the London market, opened the year at 6220.80 points and closed on December 18th at 6279.30 points, a 1% gain. Shares in the biggest US companies did a little better, but only a little. The Dow Jones index rose 6% to 13232.47 points. (These figures don't include dividends which would have added 2 to 3% to your gains.)
So if you had bought an index tracker fund at the start of the year, you wouldn't have made much money. Then again, trackers are for the long-term.....
Now let's look at the top ten performers in the FTSE 100 this year:
Data until December 17, 2007
There are six resources shares in that list including all of the top five, so this has clearly been a year for mining and oil companies. At least part of the explanation for that rise has been continued demand for commodities by the fast-growing East Asian economies. However, it's possible that the Chinese growth story may slow down next year, so I suspect that resource stocks won't be such strong performers in 2008.
Moving on to the mid-cap FTSE 250 index....
Data until December 17, 2007
There are only two true resource shares in this top ten, oil explorers Soco International and Imperial Energy. Soco is very well known to many Fools on our discussion boards. Some of the regulars on the Soco board have held shares in the company for seven years -- some maybe longer -- and are sitting on a stonking profit.
On top of those two, you could argue that Wood Group is loosely a resource company, as it supplies infrastructure and services to the energy industry including oilfields.
However, table-topping Tradus is certainly not a resource share. It's an online auction group, formerly known as QXL Ricardo. Its share price had been boosted by speculation of a bid from eBay, then after these tables were completed, an agreed bid came through from South African media group Naspers which has pushed the share price over £18 at the time of writing.
Autonomy is another former dotcom darling that has had a strong 2007. Profits are growing fast as the company's software is used to monitor email and other communications as part of the ‘War on Terror.' That said, in spite of the profits growth, a forward price earnings ratio of 31 means that I'm unlikely to buy shares in this company any time soon.
So that's a quick look at some of the share winners of 2007. I'm fairly pessimistic about prospects for the stock market as a whole in 2008 but I remain optimistic that shares will continue to be a great long-term investment, as we've said so many times before.
More: The Top Ten Trackers
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