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Diary of a Top Stocker: 5 quality blue chips I've got my eye on
What do you think of the shortlist of Citywire Top Stocks® I've drawn up for our £10,000 portfolio?
It really is time I got going with the Citywire Top Stocks® portfolio. With the FTSE 100 rallying and the mergers and acquisitions drought seemingly over, I feel I'm missing out on the action and need to put the company’s £10,000 to work.
Admittedly, I’ve been a bit busy with the launch of The Lolly. I hope you like the new section, and I urge you to show it to friends and family if you think they’d find our beginners’ guides and tips useful.
Anyway, to business: I’ve begun to draw up a shortlist from Citywire Top Stocks®, which has just been updated. Do let me know what you think. Now I’m getting down to brass tacks I realise how much you need to know to make a good decision when buying shares.
In other words, I’ve got my finger hovering over the buy button but I’m feeling a bit nervous!
What do you think of technical analysis?
I’d also be really interested in readers’ opinion of technical analysis. One of the strengths of Citywire Top Stocks® is it provides a good list of quality blue chips, many of which have growing exposure to emerging markets, pay chunky dividends and provide a good yield.
A lot of them are pretty fully valued, though, so it does make me wonder how important it'll be to find good entry points, and whether technical analysis – with its slightly bewildering jargon around resistance points, channels and trends – will be a help or a hindrance?
Going for Glaxo
One stock I will almost certainly buy is GlaxoSmithKline (GSK.L). The drugs giant remains our most popular Top Stock, held by four of the five fund managers on our panel. I feel I’ve got to buy if I’m going to honour the whole point of Citywire Top Stocks®, which is to follow what good fund managers do.
Glaxo shares fell yesterday on the company’s full-year results, which showed a 4% fall in sales. As a potential investor, however, I was encouraged to see Reuters report the group ‘is emerging from a revenue trough caused by patent expiries and a slump in sales of diabetes pill Avandia, which was linked to serious heart risks’.
The company’s pipeline of new drugs is also strengthening, with 30 potential new treatments expected to move into late-stage clinical development in the next three years.
The share price has slipped back to yesterday's close of £14.06 over the past month, having surged from £12 to a five-year high of around £15. A price to earnings (P/E) ratio of 12 does not appear outrageous for a company that returned all £5.6 billion of its free cash flow to shareholders last year in dividends and share buybacks, and which yields nearly 5%.
Also on my radar
I've got my beady eye on Vodafone (VOD.L) too. Not only is it held by three of our fund managers, its credentials as an emerging markets play has been boosted by its victory over India’s tax authorities last month. It looks as if its enormous investment in the country could start to pay off.
The share price has been choppy of late, but at yesterday’s close of 175p remains close to a three-year high which is off-putting. However, they do say you have to pay for quality, and with the P/E at a reasonable 10.4 and a well-covered dividend providing a yield of just over 5%, I am interested.
More about this:
Look up the funds
Look up the shares
- Royal Dutch Shell Plc (RDSb.L)
- GlaxoSmithkline PLC (GSK.L)
- Vodafone Group PLC (VOD.L)
- BG Group PLC (BG.L)
- Royal Dutch Shell Plc (RDSb.L)
- Unilever PLC (ULVR.L)
- Diageo PLC (DGE.L)
- Rio Tinto PLC (RIO.L)
- Xstrata PLC (XTA.L)
- Rolls-Royce Holding PLC (RR.L)
- Standard Chartered PLC (STAN.L)
- Hunting PLC (HTG.L)
- Afren PLC (AFRE.L)
- Lupus Capital PLC (LUP.L)
- African Minerals Ltd (AMIq.L)
- Virgin Media Inc (VMED.L)
- Howden Joinery Group PLC (HWDN.L)
Look up the investment trusts
Look up the fund managers
More from us
- David Kempton: my share tips for 2012
- Diary of a Top Stocker: Kenmare is a winner and I'm on the launch pad
- Smart Investor: do Diageo shares hit the spot?
- Citywire Rated Fund Managers
- Citywire Top Stocks®
- The Lolly
- Video guide to Citywire Top Stocks
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