OK, so here we are. I firmly believe that 2016 is the year that the equity bear market finally ends and the long-awaited global bull market begins.
If you’re thinking of dipping a toe into shares, there’s no better time to start investing. Here are my three picks for 2016.
Perhaps one of the biggest disappointments of 2015 has been the performance of HSBC (LSE: HSBA). Yet this is one of the most profitable companies in the UK and one of the world’s leading banks. I see the price falls of the past year not as a warning to steer clear of this firm, but as a buying opportunity.
That’s why I’ve made HSBC one of my picks of the year. Analyse the numbers and you’ll see why I like this bank. The forecast 2015 P/E ratio of 10.43 falls to 10.19 in 2016. And the dividend yield is an enticing 6.17%, rising to 6.3%. This makes HSBC the ideal income share.
I wouldn’t expect fireworks from this company, but the stock is set to climb steadily upwards.
Fidelity China Special Situations
Regular readers will know that I’m a fan of investing in China. The reasons why are not difficult to see. This is already the second richest country in the world, it has the highest growth rate, and the momentum this nation is building is astonishing.
Yet stock markets in China have been in the doldrums. I expect this to change next year. Once momentum has built in equity markets, you’ll be glad you listened my advice and bought into the rise of China.
There are a wide range of funds to choose from, but I think Fidelity China Special Situations (LSE: FCSS) is still the pick of the bunch. The fact that this investment trust trades on a discount of -14.77% makes this a no-brainer.
International Consolidated Airlines Group
The falling oil price has been one of the headlines of 2015. As we hear stories of woe from the oil producers and oil services businesses, it’s easy to overlook the fact that there will also be many winners from the commodities crisis.
And one of the biggest winners is the airline sector, especially airlines such as IAG (LSE: IAG). The owner of British Airways and Iberia is expected to rake in profits as one of its main costs tumbles in price.
Whereas competitors such as EasyJet are budget operations that are dependent on volume to make money, premium airlines like IAG are more dependent on margin and so will benefit hugely as the oil price continues to fall.
The predicted 2015 P/E ratio of 11.58 falls to just 8.16 in the following year.
I expect oil prices to remain low for the next decade and more. Which means IAG is a strong buy now and for the future.
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Prabhat Sakya owns shares in Fidelity China and EasyJet. The Motley Fool UK has recommended HSBC Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.