3 investing themes and 10 stocks for 2014

Companies to benefit from an upswing in the economic cycle.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Looking at the general market conditions in 2014 will give the best insight to what industries can benefit the most. Low interest rates are probably the first and foremost condition to factor as debt pricing will flow from it. With the RBA more concerned about kick-starting the economy to offset the winding back of the mining industry, businesses and consumers will have a hot-house environment in which to invest and spend.

Low interest rates usually start the next business cycle, so investors can prepare by taking positions in retailers like Harvey Norman (ASX: HVN), JB Hi-Fi (ASX: JBH) or smaller companies such as Nick Scali (ASX: NCK). All sell household items and electronics that buyers will pick up with more disposable income.

Low rates also spur on housing and building material companies like Boral (ASX: BLD) and James Hardie (ASX: JHX). They will be supplying both the Australian and US markets with their products and taking advantage of the improvement in both markets. Even Iluka Resources (ASX: ILU) could see more revenue in its zircon materials production, since it is used in making paint, which will be needed with more new home construction.

Another market condition is a weakening Aussie dollar. Getting back below $0.90 cents versus the US dollar will stimulate more exports and give advantage to US dollar sensitive companies with overseas business. Many international mining companies have a lot of their business denominated in US dollars, so a stronger US dollar can mean extra earnings for BHP Billiton (ASX: BHP), Rio Tinto (ASX: RIO) and Fortescue Metals Group (ASX:FMG).

All three have benefitted from the recent rise in iron ore prices, but that can be fleeting if too much supply doesn't match up with higher demand. So of the three BHP Billiton is the most diversified miner and less susceptible to setbacks in this respect.

More business in an improving economy will need more goods shipped, so logistics and shipping giant Toll Holdings (ASX: TOL) stands to gain from higher transport volumes. Higher discretionary spending by consumers will help both retailers and transport companies which supply them.

Foolish takeaway

We're in the early stages of an economic recovery and the world economy in general is brightening. The opportunities are there. The companies with the best balance sheets and strongest platforms to spring from will perform best.

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »