Prescott Securities' Ten Best Investment Ideas for 2014 identifies key trends and opportunities for investors driven by changes in technology, politics and society.
Speaking to InvestorDaily, Prescott Securities senior economist Alan Hutchinson said the way products and services are being consumed is changing at a rate never seen before.
“You can’t just sit idly by anymore; 2014 will highlight that,” Mr Hutchinson said.
“The global winds of change will result in the creation and destruction of industry sectors and businesses over the next 12 months.”
More active portfolio oversight and management will be needed, Mr Hutchinson said.
“There are too many emerging investment opportunities for sitting on your hands to be an option in 2014,” he said.
It is very hard to be on top of all the things that are going on in the world at the moment, Mr Hutchinson continued, but added that intuitions can bolster their offering by hiring people who are experts in their field.
“Whether that be international equities, Australian equities, property, infrastructure or fixed interest, it is becoming more and more important because the game is changing so much quicker than it has in the past,” he said.
“There are obviously some very intelligent, very skilled people out there that are looking at their sector and their space every day, but I think utilising them and their expertise in their sectors is going to be extremely important in 2014 and onwards.”
The Ten Best Investment Ideas for 2014
Below are the Prescott Securities Ten Best Investment Ideas for 2014, with comments from Mr Hutchinson.
1. Focus on your own goals, not the Jones’s
“Gearing into property may turn out fine for some, but it requires a clear understanding of the investor’s exposure to interest rate rises, tenancy rates and asset liquidity.”
2. Embracing change
“Baby boomers are spending more on travel, housing, technology and healthcare at levels previously thought to be excessive for retirees.”
3. The innovators
“Innovation separates the best companies from the rest of their field. Companies such as CSL pour significant resources into research and development.”
4. Serving the demographic
“Companies such as Seek stand to benefit while demand for aged care services is likely to rise and established providers such as Ramsay Health Care and Sonic Healthcare are among the best placed to take advantage of this.”
5. New political regime
“We expect increased M&A activity, particularly in the agriculture sector, as bids emerge from overseas.”
6. Tapping into China’s growing middle class
“With the pick-up in overseas travel by Chinese nationals, Sydney Airport and Westfield Group stand to benefit.”
7. Investing offshore
“This approach can provide access to high quality brands such as Apple, Google, Microsoft and Johnson&Johnson.”
8. Yield does into equal income
“When selecting stocks, be wary of focusing solely on yield. Strong cash profit earnings to support dividend payments are what matters.”
9. Infrastructure and property
“These types of assets provide long life, regular income streams that, if managed correctly, should also deliver a level of capital growth over time.”
10. What to do with banks
“Investors buying banks on the capital growth story may need to lower their expectations.”
