Are these the best 12 stocks for 2014?

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:

  1. 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.
  2. A recovery in the construction and housing industry
  3. A commodity price rebound. NOTE: The broker makes a tenuous link here between an almond producer and a giant global commodities producer.
  4. A falling Aussie dollar, and
  5. 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.


Want a better idea, with a thorough analysis by The Motley Fool team?

Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."

Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.