We asked our freelance writers to reveal the shares that they believe investors should consider buying in 2024. Here’s what they picked!
Ashtead
What it does: Ashtead provides rental services for equipment in the construction and industrial sectors in the UK, USA and Canada.
By Gordon Best. Ashtead (LSE:AHT) is a stock I’ve been getting excited about.
Construction has long been considered a way for governments to boost the economy, and with elections incoming for the UK and USA, there is a huge pipeline of work expected. With earnings expected to grow by 12% over the next year, well ahead of the sector average of 8%, I see some tremendous opportunities ahead. Beyond what is already scheduled, there is enormous potential for Ashtead to benefit from the investments being made in infrastructure, renewable energy, and building the facilities required for AI and data science. This is already taking place in the US, but can clearly be even larger on a global scale.
Of course, if a recession emerges, and spending decreases, then the share price may suffer. However, with solid financials, the company appears strong enough to survive this, and look to the future with confidence.
Gordon Best does not own shares in Ashtead.
BAE Systems
What it does: BAE Systems operates in around 40 countries and is a major supplier to the US, UK, Saudi Arabia and Australia.
By Royston Wild. Defence giant BAE Systems (LSE:BA.) is one of a minority of FTSE 100 stocks that have risen in value in 2023. I’m backing it to perform strongly next year too as the geopolitical landscape unfortunately continues to fracture.
Weapons spending across the globe hit fresh all-time peaks in 2022 following Russia’s invasion of Ukraine. Following tragic developments in the Middle East, and with concerns over Chinese foreign policy still bubbling away, arms-related spending by developed and emerging market is likely to keep climbing.
Against this backcloth, BAE Systems reported announced a record order backlog of £66.2m as of June. This was thanks to a whopping £21.1bn worth of new orders booked in the first half of 2023.
This is testament to the broad range of industry-leading technologies it supplies and its top-tier status with the big-spending US and UK governments. Project delivery problems are a constant threat for companies like this. But BAE Systems’ strong track record of execution helps soothe any fears I have.
Royston Wild does not own shares in BAE Systems.
Centamin
What it does: Centamin is a leading gold producer. It owns and operates Sukari, Egypt’s largest gold mine.
By Andrew Mackie. It has been well over a decade since it was in vogue to be an investor in the precious metals space. Today, the value of the entire industry relative to the rest of the market doesn’t even register on a pie chart. I believe that 2024 will be the year when all that changes.
Increasing geopolitical conflict as well as huge fiscal government deficits across the globe, has increased the importance of owning a neutral asset with no counterparty risk.
Centamin (LSE: CEY) is well placed to benefit as the next gold cycle takes off. Between 2024-2032, production at Sukari is expected to average 506koz, per year. All-in-sustaining cost (AISC) for the life of the mine is expected to be $922oz. That is 32% below its 2022 AISC cost base. Improved operating margins will lead to greater free cash flow generation.
Centamin also has a healthy exploration pipeline. It is exploring for reserves in Cote d’Ivoire, West Africa. The company is also busy exploring for new gold reserves in Egypt’s Nubian Shield. It has already secured 3,000 square kilometres of highly prospective ground in the Egyptian eastern desert.
Of course, exploration is risky. Even if a major gold discovery is made, there is no guarantee that it will ever be mined. As Sukari’s assets deplete, if new assets failed to materialise, its share price would undoubtedly suffer.
For me, gold’s role as the one truly safe-haven monetary asset will never be usurped. Central banks across the world agree with me. The likes of Russia and China have been actively buying gold and selling US treasuries.
Andrew Mackie owns shares in Centamin.
Compass Group
What it does: Compass Group is a global food services group that offers dining solutions to a range of organisations across the world.
By Harshil Patel. The global economy faces several headwinds in 2024. With recession risks looming, I’d like to focus on defensive companies that are less reliant on consumer spending.
One such business is Compass Group (LSE:CPG). After a few challenging years, this FTSE 100 stock has emerged from the pandemic in a much stronger position.
Higher costs have made in-house catering less attractive for organisations. And Compass has managed to offer competitive prices by carefully managing menus and making cost-savings.
With almost half of the food service market yet to outsource, there’s plenty of opportunity for Compass to grow over the coming years.
Compass has become a more defensive business in recent years by growing its healthcare and education sectors. These now make up 45% of total sales and aren’t so reliant on struggling consumers in a difficult economy.
Bear in mind that its profit margin has yet to recover from pre-pandemic levels. That said, it is moving in the right direction.
Overall, I’d buy the shares for steady cashflows and steady growth in 2024 and beyond.
Harshil Patel does not own shares in Compass Group.
Ferrexpo
What it does: A FTSE 250 company that operates three iron-ore mines in war-torn Ukraine and exports iron pellets globally.
By Mark Tovey. Ferrexpo (LSE:FXPO) has a market cap of £463m. That’s around half of what it netted in profit in 2021 alone. The Russian invasion in 2022 has tanked the company’s earnings and scared off investors.
But I’ve got my eye on the post-war period. The Ukrainians’ brave resistance has been bankrolled mainly by the US, but I don’t think that will continue into 2025.
With a Presidential election and possibly a recession coming next year, squeezed American voters might push back against big spending abroad. In October 2023, a majority of Americans polled by Reuters were not in favour of sending arms to Ukraine.
Post-war, Ferrexpo could begin to recover its normal operations. It might even get a boost from reconstruction efforts.
I’ll start building a position in Ferrexpo when I have spare cash. I’ll only allocate a small amount, because this is a high-risk investment. In the worst-case scenario, Ferrexpo could see its assets destroyed by the fighting and even go out of business.
Mark Tovey does not have any position in Ferrexpo.
Kainos Group
What it does: Kainos works closely with other companies to improve operational efficiency using digital solutions.
By Zaven Boyrazian. 2023 has become the year of efficiency, not just for Meta Platforms but for countless other enterprises worldwide. With the macroeconomic landscape pressuring businesses, the quest for higher margins has become a recurring theme. And it’s one that Kainos Group (LSE:KNOS) is capitalising on.
This software & services company is a specialist in digitalisation and integrating the Workday human capital management (HCM) platform into complex corporate structures. In other words, Kainos enables companies to become more efficient. And it’s a solution already used by multiple tech stock darlings in Silicon Valley like Shopify and Netflix.
Its revenue is highly dependent on its relationship with Workday, which does present a risk if things turn sour. But having worked together since 2011, that seems unlikely, especially considering they just recently expanded their alliance.
Kainos now has unrestricted access to Workday’s US customer base to upsell its services. That’s another ~6,650 potential clients. And combining this with the rising demand for its services places Kainos in the perfect position to thrive in 2024 and beyond.
Zaven Boyrazian owns shares in Kainos Group and Shopify.
Persimmon
What it does: York-based Persimmon is one of the UK’s largest housebuilders
By Paul Summers: Pretty much anything associated with the UK housing market had a rotten 2023. However, the most hated stocks in one year often turn out to be the most loved in the next. For this reason, my (somewhat biased) pick is Persimmon (LSE: PSN).
November’s Q3 update update contained some green shoots with the company raising its completion target while stating that margins would remain steady. A solid end-of-year cash balance of £300m-£500m was also expected. Separately, the Halifax HPI (house price index) showed that prices were beginning to stabilise.
Now, this isn’t to say that the recovery will happen overnight. Indeed, a lot will depend on what happens next to interest rates. That said, I reckon anything remotely bullish from the Bank of England could send the share price rocketing as investors conclude the worst is over.
In the meantime, I plan to keep re-investing those dividends.
Paul Summers owns shares in Persimmon
Primary Health Properties
What it does: the company is a real estate investment trust that invests in healthcare facilities.
By Jon Smith. Primary Health Properties (LSE:PHP) is a proper British share, with all of the healthcare properties located within the UK. The 513 properties provide a stable form of income for the company, that sits in the FTSE 250.
Over the past year, the share price has fallen by 17.5%. This is consistent with the broader sector moves, which has been dented by lower demand and higher costs of borrowing. However, I believe that the sector is due to rebound in 2024. This factors in potential interest rate cuts as well as people being happy to agree to large capital expenditure projects due to improved sentiment.
The risk is that my view on the property market is wrong, with a longer than expected recovery period.
With a current dividend yield of 7.12%, I feel the shares are well positioned for income investors to consider buying in 2024.
Jon Smith does not own shares in Primary Health Properties
Scottish Mortgage Investment Trust
What it does: Run by Baillie Gifford, the stock is a publicly traded trust focused on long-term growth and innovation.
By Dr James Fox. Scottish Mortgage Investment Trust (LSE:SMT) shares have continued falling despite the resurgence of growth-oriented stocks like Nvidia and ASML over the past year – both of which are major holdings of the Baillie Gifford fund.
The stock now trades with a 17% discount to the fund’s net asset value. That is significant. In other words, I’d be getting £1 of assets for an 83p investment.
Of course, there’s a caveat. And that’s the fact that a quarter of the fund’s investments are in privately held companies which don’t have established market values. As such, investors could be dubious about the true value of some of these holdings.
Nonetheless, I believe the discount is overplayed and I can’t argue with the fund’s track record. Its managers have continually picked stocks like Tesla way before they became household names.
Currently trading at less than half its peak market value, I’m considering buying more of its shares for 2024.
James Fox owns shares in Scottish Mortgage Investment Trust
Scottish Mortgage Investment Trust
What it does: Scottish Mortgage Investment Trust invests globally in what it considers to be the world’s most exceptional growth companies.
By Ben McPoland. My pick for 2024 is Scottish Mortgage Investment Trust (LSE: SMT). The share price has badly underperformed since late 2021 after interest rates rose and investors sold off unprofitable growth stocks.
However, I think a couple of potential developments in 2024 could help the share price recover. First, inflation seems to be in a downward trend and interest rates may have peaked. Indeed, as I write, there is speculation that interest rates could be cut in the middle of the year.
That would be bullish for stocks in general, especially growth stocks. And that could also tempt more companies to go public, including Scottish Mortgage holdings like Northvolt and Stripe. That could relieve pressure on the unlisted side of the portfolio, which the market is sceptical about.
Of course, I’m inviting egg on my face if none of this happens. If rates don’t come down and the IPO market remains in a deep-freeze, then the shares could continue to languish. But I added substantially to my holding in 2023 in anticipation of a strong possible recovery.
Ben McPoland owns shares of Scottish Mortgage Investment Trust.
Smith & Nephew
What it does: Smith & Nephew is a medical technology company that is focused on the repair, regeneration, and replacement of soft and hard tissue.
By Edward Sheldon, CFA. Smith & Nephew (LSE: SN.) shares have underperformed recently. Dragged down by concerns over the long-term impact of weight-loss drugs, and general weakness across the healthcare sector, they are back at 2014 levels.
I think we could see a big rebound in 2024, however. In a recent trading update, the company reported underlying revenue growth of 7.7% for the third quarter of 2023, which suggests that it has a lot of momentum right now.
Meanwhile, CEO Deepak Nath has said that weight-loss drugs could actually benefit the company as they may help previously ineligible overweight patients get approval for joint replacement surgery.
Turning to the valuation, this stock is cheap. As I write this, it is sporting a price-to-earnings (P/E) ratio of about 12. At that multiple, I see a lot of value on offer.
A risk here is continued economic weakness in China. This could lead to slower-than-expected top-line growth next year.
At the current valuation, however, I see a decent margin of safety.
Edward Sheldon owns shares in Smith & Nephew
