Investment bank RBS Morgans has released a list of twelve stocks that its research team expects to outperform the market during 2014.
Earlier this week the Australian Financial Review published its 13 stocks for Christmas, which you can read about here. We might just have to check on both their performances in early 2015.
Nevertheless, the broker says its criteria were as follows:
- Companies leveraged to the improving domestic economy. Low interest rates are driving a housing revival, which appears in turn to be driving improved consumer confidence and rising discretionary spending.
- A recovery in the construction and housing industry
- A commodity price rebound. NOTE: The broker makes a tenuous link here between an almond producer and a giant global commodities producer.
- A falling Aussie dollar, and
- Global growth stories
RBS Morgans says rising discretionary spending should be good for Crown Resorts (ASX: CWN), Harvey Norman (ASX: HVN), Silver Chef (ASX: SIV), Super Retail Group (ASX: SUL) and last but not least, IT company SMS Management (ASX: SMX).
The housing recovery should benefit property developer FKP Property (ASX: FKP), building supplies company Fletcher Building (ASX: FBU) and bathroom and kitchen accessories supplier GWA Group (ASX: GWA).
BHP Billiton (ASX: BHP) is expected to outperform if commodities prices rebound. The giant miner has its fingers in many pies including iron ore, copper, coal, oil and gas, nickel, potash, aluminium, and manganese. Believe it or not, but a shortage of honey bees in California should be good news for Australian almond producer, Select Harvests (ASX: SHV). It seems the bee population has declined in the US, but they are needed to pollinate the almond orchards, leading to a 800,000 tonne drop in US production this year. That should see almond prices rise.
Diagnostic and pathology services company Sonic Healthcare (ASX: SHL) should benefit from a rise in demand for healthcare, while paper and packaging group Amcor (ASX: AMC) should receive a boost from the falling Aussie dollar and a return to global growth.
Foolish takeaway
Perhaps it should be expected, but RBS Morgans makes no reference to whether the shares are cheap or expensive, or whether these are quality companies that are also capable of growing earnings over more than just the next twelve months. As a result, Foolish investors may want to take this list with a pinch of salt.
