Happy Wednesday!
Now, I promised myself I would not write any more about the Scottish independence referendum…
But I just can’t help myself after reading the Financial Times the other day.
You see, after everyone from Neil Woodford and Sir Richard Branson, all the way down to Susan Boyle and David Beckham, have had their say…
An unnamed head of a Scottish asset manager then chimes in with what could be the ultimate summary of the whole situation:
“Most professionals are cacking themselves.”
This is why I’m reporting all the doom and gloom about a YES win
Yes, who’d be a professional investment manager at a time like this?
Nervous clients are ringing up asking what’s going to happen in the vote and what exactly you’re going to do about it – and yet nobody has a clue what the outcome will be or what will happen after that.
At least for you, me and every other ordinary investing Fool, if panic selling does kick in when the result is declared on Friday…we’ll only have our own portfolios to worry about.
And it goes without saying that we should all be up, ready and willing to pick up any long-term bargains if everybody then starts banging on about a euro-style currency crisis or a Great Depression or even Spain without the sun.
Indeed, such negative views prompted Iain G. to send an e-mail…
“Interesting to see that ‘the fool’ lives up to its name by promoting all the negative views of Scotland – a country that invented most of the modern world”
Well, I am not here to bash Scotland or give my political views or give you all some cock-and-bull story about what will really happen post-referendum.
Instead, my job is simply to guide you all through the stock market the best I can, help you all invest sensibly and — from time to time — point you all towards some potentially money-making opportunities.
It’s just that, when almost every professional investor appears to claim a YES win would be bad news for the UK economy, the markets and many companies…
…then I feel I have a duty to report such pessimism… and signal the contrarian buying opportunity it could provide!
And talking of contrarian buying opportunities…
I can’t believe it — this top ‘dog’ stock has doubled in price
I was shocked to see a share best known for disappointments among the top performers of the last twelve months.
- Shire Pharmaceuticals up 107%
- Associated British Foods up 42%
- Whitbread up 33%
- Next up 32%
- Aviva up 25%
No surprise to see tip-top operators such Whitbread and Next among the leaders.
(Further proof, if you ever needed it, that quality firms can deliver handsome rewards to shareholders regardless of economic and political events here and abroad.)
But Aviva (LSE: AV) (NYSE: AV.US)?!
Yes, the hapless insurer is up a super 25% since this time last year and up 100%-plus since mid-2012. Which just goes to show that sometimes every dog can have its day.
I mean, Aviva has cut its annual dividend not once but twice during the last five years, and the current 15p payout is almost 40% less than the 24p paid ten years ago…
And yet there it is, having doubled in price.
Those brave and smart enough to buy Aviva on the combination of a bombed-out dividend, catastrophic share price and, very importantly — a new boss appointed to turn things around – will be smiling now.
Winners are grinners, after all.
However, it does make you think about what shares could be out there right now… with their dividends slashed and share prices in the toilet… but could one day turn around to make ace recovery plays…
Ahem…did somebody say Tesco (LSE: TSCO)?
Uh oh, the price is down 50% and back to levels seen in 2000
Now, I am not suggesting you all buy Tesco today.
But if you like to go against the crowd and back out-of-favour businesses that have the prospect of recovery, then surely the supermarket must be towards the top of your watch list.
All the contrarian signs seem to be there…
- Awful share price? At 225p, it is down 50% in four years and back to levels first seen in 2000. Check.
- Bombed-out dividend? Interim payout has just been cut 75%. Check.
- New boss at the helm? Dave Lewis of Unilever is now in charge and talks of “getting back to the core of the business”. Check.
Plus you have a business that despite all the pessimism still retains a 29% market-leading share – more than 3 times the combined power of upstarts Aldi and Lidl.
You might feel mad contemplating Tesco now, but I am pretty sure anybody buying Aviva before its 100%-plus run-up felt quite mad, too.
All told, it appears to me Tesco’s size and status should make its current predicament quite fixable. But as always, only time will tell.
