The robust outlook for gold prices, allied with strong production growth and work on the exploration front, makes Polymetal International a top buy for 2020, in my opinion.
It’d be a mistake to suggest that the mining giant is just a brilliant share to load up on today though. After all, geopolitical and macroeconomic shocks that hammer financial markets can be sudden as well as a slow-burn. Therefore always having exposure to flight-to-safety assets like gold stocks or the metal itself is a good idea.
And what a great buy Polymetal is at current prices, I feel. A predicted 32% earnings rise next year by City analysts creates a rock-bottom for P/E multiple of 10.2 times. And what’s more, the gold digger also sports a bulging 5% dividend yield.
Shorting out
I’m not prepared to touch shares in Dixons Carphone (LSE: DC), however, even though dividend yields here set fire to the forward average of 3.3% for Britain’s mid-caps.
For the current fiscal year (to April 2020) this sits at 4.7%, though for me the appeal of this generous yield is overshadowed by City expectations that earnings will tumble 32% year-on-year. The number crunchers have been downgrading their profit predictions as the period has evolved, and if recent retail data is anything to go by, more reductions can be expected. That’s why I’m not bothered by Dixons Carphone’s rock-bottom P/E ratio of 11 times either.
John Lewis is the latest to raise fears over what retailers can expect in the new calendar year, the company advising that total sales in the week to December 21 were down 5.1% on the corresponding 2018 week. And most worryingly for Dixons Carphone was news that electricals sales at John Lewis tanked 8.9% year on year.
It’s not a surprise that sales of ‘big ticket’ items like fridges, TVs and laptops have taken the biggest hit. They are always the first to fall in times of intense political and economic uncertainty. And with the chances of a no-deal Brexit at the end of next year rising in recent days come increased expectations that Dixons Carphone’s revenues column should remain under pressure, too.
Big box beauty
I’d be much happier to tip Tritax Big Box REIT as a better buy for income chasers in 2020. And not only because of its bigger 4.9% dividend yield for next year.
Sure, online retail sales growth may have been slowing of late, a consequence of that broader pressure on shoppers’ confidence. But there’s no doubt that e-commerce still has plenty of room to expand over the next decade and beyond, and as an owner and operator of ‘big box’ logistics and storage depots, Tritax is well placed to ride this trend.
A predicted 4% earnings rise next year leaves the FTSE 250 firm trading on a high P/E ratio of 20.9 times, though I reckon its exceptional structural opportunities make it worthy of this premium.
