If finding stocks to buy was easy, we’d all be rich! However, it’s much more complex to find the right picks at the right time. Let me explore some current picks I’ve got my eye on and my rationale.
Bull market incoming?
A lot has been written about macroeconomic volatility caused by rising interest rates and soaring inflation. In addition to this, geopolitical tensions haven’t helped investor sentiment or global markets either.
The latter can hamper global market and I hope ends in speedy and peaceful resolutions. However, I reckon it’s the macroeconomic factors that are more pivotal for any potential bull run.
I think, and so do economic commentators, that recent volatility may be showing signs of slowing. If you think back, inflation reached 10% and the Bank of England (BoE) increased the base rate 15 times, to the current 5.25%. Latest figures show inflation is now closer to 4% and falling. More importantly, the BoE didn’t increase the rate in its most recent update.
I’m not saying we’re out of the woods, but the signs are promising.
My picks
I’ve earmarked three stocks I reckon could help me boost my holdings and benefit from any potential market rally. I’ll be looking to buy shares in all three when I next have some investable cash!
Barratt Developments shares look good value for money on a price-to-earnings ratio of nine. Plus, a dividend yield of 6.2% would boost my passive income. I’m conscious that dividends are never guaranteed. As one of the largest developers in the country, its profile and presence could be key in helping ease the housing shortage in the UK, and boost its own shares and performance at the same time. The risk for Barratt is continued economic volatility, although I see this as a shorter-term issue. If costs stay high, margins, performance, and returns could be hurt.
Next on my list is B&M. The recent cost-of-living crisis has really helped the FTSE 100 incumbent fly high. They currently trade on a P/E ratio of 15 and offer a dividend yield of 6.2% also. From a bearish perspective, B&M’s rise can be attributed to organic and acquisition-led growth. The latter is risky as one bad choice could impact sentiment, performance, and returns. Disposals can be costly on many fronts!
Although financial services stocks have struggled during the turbulence, I like the look of HSBC shares. Alongside its dominant market position, I reckon it is primed for further growth due to its exposure and profile in Asia. This particular region is set for major economic growth in the future and HSBC could capitalise here. I must note that current economic growth has slowed in China, so perhaps there’s some further turbulence ahead before any growth and returns are realised. Nevertheless, the shares look good value for money to me on a P/E ratio of five and a dividend yield of 5.5% looks well covered by earnings.
To conclude, these are just three stocks among quite a few on my radar for this year. No doubt my list will evolve, and change as the year goes on and market developments occur.
