SECTOR PICKS FOR 2006
So first off - Happy New Year...I hope you all have a profitable 2006!
I thought I might struggle this year to make as much money as last, but the market's already got off to a flying start. However, as the gains pile on, for many investors you always have to be careful.
Firstly, the market has a habit of biting you on the bum when you least expect it, so it's important not to get smug and feel invincible. Secondly, it becomes more tempting to over-trade with money you don't have using CFDs and spread betting. Be careful! I hate forecasting the year ahead and I don't tend to do predictions (especially on the FTSE etc) as it's all just guessing.
But here are my picks from the market sectors for this year:
I have to include my three favourite oil stocks on my hit list for the year. They are: Burren Energy, Dragon Oil, and Tullow. I've already trebled my money in Burren, doubled in Dragon and I think I will soon double in Tullow. But rather than take profits, I'm holding out for more during 2006. The most exciting thing is that all three companies could be involved in takeovers just like Paladin last year.
Carphone Warehouse is a must for any portfolio in 2006. It's going to be a big winner in the telecoms/retail sector as it grows to become a mighty rival of BT. Its clever acquisitions of rivals will see that it grows in stature as it accumulates customers and moves into broadband.
I like two stocks from the tech sector: CSR and Wolfson. I've been making pots of cash from both of these, but there is plenty more to come I believe. Wolfson's chips are used in iPods and it has an intelligent management - it could easily double from 300 to 600. I also bought thousands of pounds worth of CSR in 2005 and this really paid off - but the company still looks undervalued as its sector will boom this year.
VP Group is top of the list for me in the support services sector - it's a lovely little equipment rental company which continues to grow fast.
Probably my riskiest pick but Harvey Nash looks like a ripe recovery story. The shares look to have fallen too far and could be very strong in the early part of the year.
Rotork looks the pick - it's an extremely sound company. I've nearly doubled on this one and, again, there is no reason why the share shouldn't rise further. Brammer, another top company, tends to stay quiet before rocketing up.
Are you kidding?! Why buy retail?! They all look like trouble!
CONSTUCTION / HOUSEBUILDING
This is a difficult one to call but worth having some exposure. It certainly looks like the predicted house price crash isn't emerging just yet. My picks would be Bovis Homes and a recovery for Costain. Birse could be interesting especially considering the 8% yield, while WS Atkins could surprise to the upside.
Generally too risky for me but Vernalis looks a promising but chancy buy.
And finally a couple of "boring stocks". Investors tend to ignore these because they do boring things and don't move much (except steadily upwards). My boring picks are White Young Green and Carrs Milling.
Whatever you choose in 2006 I wish you luck. But do beware of any downturn. We've been in a bull market since 2003. It won't last forever - so at some point remember to take profits!