The turn of the year is, of course, a great time to look over one’s share portfolio and pick out the stars of the past 12 months — as well as the stinkers. Fortunately, my personal collection has made decent progress in 2013, and here I have picked out my favourite three purchases this year.
| Company | Buy Price | Current Price | % Change |
|---|---|---|---|
| DS Smith (LSE: SMDS) | 229.7p | 331.7p | 44.4% |
| Imperial Tobacco Group (LSE: IMT) (NASDAQOTH: ITYBY.US) | 2,394.8p | 2,334p | -2.5% |
| GKN (LSE: GKN) | 267.4p | 371.5p | 38.9% |
DS Smith
DS Smith has, by some margin, been my most profitable stock purchase this year. The FTSE 250 constituent is a leading innovator in the business of box design in the fast-moving consumer goods sector, whose packaging allows supermarkets to maximise their floor space, catch the eye of shoppers with elaborate product displays, and allow shelves to be restacked quickly and efficiently. Recent acquisition activity in Scandinavia has also allowed it to extend its presence on the continent, particularly in high-growth Eastern European markets.
And despite this year’s stunning performance, DS Smith still provides great value at current prices based on current City projections. The company is expected to punch earnings per share growth of 20% and 22% in the years ending April 2014 and 2015 respectively, readings which produce price-to-earnings-to-growth (PEG) multiples of 0.8 and 0.6 for these years, well below the bargain watermark of 1.
Imperial Tobacco Group
At face value, describing one of my loss-making shares as one of my favourite picks seems a tad barmy. The stock has been fairly volatile in 2013, as signs of declining tobacco sales — exacerbated by a ramping up of anti-smoking legislation across the globe — threatens to put paid to the solid run of earnings growth over many years. However, I am excited by the progress the firm’s transformation plan is making, which includes the closure of many underperforming labels and re-focus on its revenue-driving brands like Davidoff and West, as well as entry next year into the lucrative e-cigarette market.
The defensive nature behind tobacco demand means that the firm is expected to punch further growth, albeit of just 2%, for the year ending September 2014, although I expect expansion to step up a notch further out. More appetising for the near term is a forward dividend yield of 5.4%, which is sure to whet the appetite of most income investors.
GKN
In my opinion, GKN is a hallmark of the strength of British engineering, the firm’s established expertise making it a a top-tier parts supplier to aeroplane and automobile manufacturers across the globe. The company generates around 60% of all revenues from commercial car demand, particularly in the rapidly-growing premium car segment where sales in emerging markets continue to surge. Although sales of military parts remain subdued, as one would expect, striding demand from the civil aerospace sector also looks set to drive the group order book skywards well into the future.
City analysts expect the company to punch meaty earnings per share growth of 18% in 2014, a figure which leaves GKN changing hands on a PEG ratio of 0.7.
