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Top share tips for 2011


Nick Raynor and Graham Spooner, investment advisers at The Share Centre have come up with their 6 favourite companies for 2011.

First, a quick review of last year’s tips:

Chloride +97 pct -  The company, as we suggested it might, was taken over

Compass Group +27.5 pct – 2.5% yield

Marstons +26 pct – 5% yield

ITV +26 pct

Churchill Mining +14 pct

National Grid +3 pct – 5% yield

Share Tips for 2011

Centrica - Lower risk

The largest supplier of gas in the UK should again be boosted by another cold winter and the 7 pct increase in price for its gas. The group have been increasing their own volume of gas production, along with buying gas assets in Canada, as well as developing its services operations. They have also taken a 20 pct stake in the new holding company for British Energy.Demand for natural gas could come in a number of forms but the one significant reason raising debate in the UK over the next decade will be the replacement of nuclear power stations as the current ones are coming to the end of their useful lives. Gas could be seen as one of the alternatives to supply the energy needed to fire power stations, should the rebuilding of nuclear power stations be delayed.

The reasonable yield of 3.7 pct yield, improving performance, along with its position in the UK energy market helps makes Centrica our preferred lower risk share for 2011.

Rio Tinto - Medium risk

Rio Tinto is one of the world’s largest mining groups, being especially active in North America and Australia. Key commodities are Iron Ore, Copper and Coal. Around half of its earnings come from Iron Ore where its production has hit record levels and prices have remained high. The strong cash flow continues to eat into its debt level. Recent news includes investment in a copper project in Mongolia and a £2.5 billion bid for Australian coal group Riversdale.

These are exciting times for miners with high prices for commodities on the back of strong demand from China. The attractions for investors who want exposure to a volatile sector are good earnings momentum and the improving balance sheet. There are also hopes that the proposed Australia mining super tax will be watered down.

Prudential – Medium risk

The UK’s largest life assurance company stated in an investor presentation in December that it expects to double profits from Asia over the next three years. This followed on from a 25 pct rise in third quarter profits in that region to £353 million.

Recent updates have helped restore confidence in Prudential after its failed bid for AIG in 2010. Final results due in February will hopefully rubber stamp this trend. The new and demanding growth targets that management are targeting, if achieved, should reward long term investors wishing to have exposure to the Asia growth story.

Enquest – Medium risk

Oil and gas production and development group that was spun off from Petrofac last year, with assets in the North Sea. Guidance for this year is for 20,000 barrels of oil per day. Enquest aim to exploit lower risk opportunities based on proven areas of oil reserves. They trade on an estimated forward p/e of 12.

The oil price continues to move higher and we are keen to have exposure to the sector through one of the medium size groups that are geared to this rise. Enquest are confident that their assets offer solid organic growth opportunities in a production biased portfolio. Last year the sector was subject to M&A activity, which could continue in 2011.

Booker Group – Higher risk

The UK cash and carry group, Booker, reported interim results that were better than expected with a 24 pct rise in profits to £36.9 million, helped by rising online sales, expansion into the catering market and demand for fresh meat and vegetables. The dividend was raised by 12.5 pct to 0.27 pence. Two more stores in India will be opened in the first half of this year. The highly regarded management team have turned the fortunes of the company round, resulting in a steady increase in customer numbers and a stronger balance sheet. They are now setting their sights on expansion into India, hence the higher risk. Although the shares have performed well since October, we feel there could be further gains.

Dominion Petroleum – Higher risk

This oil and gas exploration company could be set for a tremendous 2011. Drilling is due to take place at its Alpha prospect later this year and an independent audit has already said that the prospect could be worth up to 1.1 billion barrels of oil and 7 trillion cubic feet of gas.

It has not been all plain sailing as investors should know, recently one of the company’s interests in a well was deemed worthless, as the well found no oil or gas. This highlights the risk with these types of companies but the rewards could also be huge. Dominion Petroleum is AIM listed and is therefore ineligible for an ISA.

To monitor the progress of these shares throughout 2011 and read any updated thoughts and opinions you will need to be registered user at The Share Centre.  To register for free click here.

Please read our investment research policy to understand how the Advice team arrive at our view.

Showing 48 comments

  1. simon brenner

    e mails welcome

  2. M.R. Shirodkar

    Regarding the Centrica recommendation, one minute you refer to Centrica using the third-person plural: “The group HAVE been increasing THEIR own volume of gas production”, then later in the same sentence you switch to third-person singular: “…as well as developing ITS services operations” not THEIR service operations. It’s one or the other, not both! Can the person who writes these please sort out his/her basic English grammar?

  3. Sorry M.R.Shirodkar, but I didn’t quite catch your comment on whether this was a good tip or not ??

  4. I think Mr Shirodka is quite right. There is far too much sloppy journalism available online.

    It suggests and untidy and disorganised mind and consequently how, in this case, can the share tips be taken seriously?
    PS I don’t see anything exciting about Centrica.

  5. Mike, those in glasshouses should not throw stones etc.
    it should be AN untidy mind….
    get a grip !

  6. George Mackle

    Point recognised regarding the mixed use of the singular/plural third person – more interested however in a good recomendation only time will tell

  7. Peter Walker

    OMG GAL…..What about Brazilian Diamonds????

  8. Simon Geraghty

    I think we are missing the point a little. The share tips for investers are the more important item. I am still quit the beginer at share investment however, with ref to RIO Tinto, if my memory serves, from approx. the middle of last year they were around the £30.00 mark. Now they are approx £44.00 per share. Can the price really go that much higher to obtain a decent return on them?

  9. Did you not recommend BP Shares this time last year in preference to Shell Shares. BP shares have dropped substantially since the GOM fiasco & the Shell Shares have increased in value by circa 30%

  10. Mike in Spain

    Your share watch search shows 22 separate Prudential shares. Which one are you recommending? A search for Dominium Petroleum draws a blank.

  11. Hey David, please don’t disparage those of us forced to live in glarzowsez!!

  12. Joe Bleasdale

    Few UK share tipsters mention foreign companies. I bought shares in Siemens, BASF and Schnieder Electric, all of which have done well, particularly when the pound fell against the Euro and the dollar.
    Seeing that foreign companies such as RWE and GDF Suez and Iberdrolla own more than half our utilities, the only stable source of income in the foreseable future, I’m surprised that they tend to be ignored. Also, there is no UK stamp duty on them.

  13. Centrica is always going to be boring it is what I know as a widows and orphans investment – solid and reliable good for many years if you never review your portfolio. That is why I suggest The Share Centre have it as a low risk investment. If you want somthing more exciting why not try BP, it has leaks everywhere and problems with left not knowing what right is doing in Russia. What really upsets me is Barclays, they pay enormous bonuses, yet the capital being used is provided by the shareholders who they pay peanuts to.

  14. Dominium Petroleum is on the AIM market others worth considering SXX,BHR &SRES

  15. M R Shirodkar – it is not one or the other. As the subject is singular – the group – everything else should be singular too (it is called number concord).
    Anyway I too Joe, am interested in companies listed on other exchanges

  16. Am I on the wrong Blog site ?
    I thought this was about Shares rather than English grammar !!!

  17. Been with Booker for quite some time was always impressed with their UK Ops and they are now doing very well. I strongly agree with Richard and as a personal policy, I do not invest with companies who quite blatantly are taking the shareholders for a ride, wake up folks!

  18. kenmare shares have nearly doubled in the last few months, and still going well, its going to take a’while
    to get any sort of return from the banks, as they have had so many knockbacks this last year, its got to be oil and minning to invest in looking at the growth in china and india and asia as a whole.

  19. On the subject of non-UK shares. German economy is growing and they non longer have easy options of expeorting capital to Greece, spain etc. I was thinking that they might internalise their investments. thus german construction companies. Any suggestions?

  20. Bought last September some Chariot oil and gas (char) @130 done very well, heard Global Petroleum have fields adjacent to CHAR , they at present stand at 20p thinking of investing hopping it to be another CHAR. Your views ?

  21. I bought my first shares just over a year ago and as such, I regard myself as a novice however, my first investment has to date, returned approximately 330% profit.

    In Jan 2010, I bought shares in African Eagle Mining at 4.54p per share. At close of business on friday 11th Feb 2011, shares in AFE were valued at 16p each.

    I have recently bought shares in Cosalt (CSLT) at 3.72p per share. At close of business on 11/2/11, the shares were valued at 6p each. This represents a profit of 161%

    I strongly believe that there is good value to be had in longer term investment and am very confident that with a strong order book, CSLT shares will substantialy increase in value during 2011. I am confident of an increase in value to around the £1 per share mark towards the end of this year.

    With this in mind, an investment of just £600 at the current price of 6p per share, would return £10,000 should a value of £1 per share be achieved.

    Given the initial investment to potential return ratio, I would say this is a risk worth taking.


  22. My share tips for this year:

    a good return from all seems likely in 2011.

  23. Great thread – educational and entertaining!

  24. simon brenner

    why are utilities so up and down?

  25. archie henderson

    I am new to buying shares how much money would i need to start buying share , at the moment i am a very small invester with just an isa to my buying shares in it every month any help would be good.

  26. The Share Centre

    Hi Archie,

    Thanks for your question.

    We do offer a Regular Investment Service where you can start dealing with as little as £10.00 per month http://www.share.com/a/regular-investment-service.html. Although, please remember purchase costs can make periodic small investments inefficient so you’ll need to look at how much each transaction costs. All of our investment accounts and services are straightforward and offer open pricing structures with no hidden charges. For more information on our services please follow this link – http://www.share.com/a/investor_accounts_and_services.html.

    As a customer of The Share Centre you can also register for advice at no extra charge. Our Advice team can talk through investment ideas with you, give you a second opinion, perform checks on your investments and even explain some of the strategies you could use. And because we don’t charge our customers extra – you can use us as much as you want. For information on how to register for telephone advice please follow this link – http://www.share.com/a/telephone-advice.html.

    Kind regards

  27. Archie, in addition to Ruth’s good words, my opinion to make it worthwhile, £200, putting £50 in 4 low price stocks so you have lots of shares rather than few high value ones. That way, if one or two are dissappointing, you may be encouraged by better performing options. Research bulletin boards like LSE and Interactive Investor and check often to keep abreast of news. Search the InvestEgate website and look back through previous Regulatory News Service reports for the stocks you are looking at and observe what the effect has been at that time by studying the historical charts. Then make your choices. Penny shares on the AIM markets are much more exciting than the big stocks, but be prepared for losses. Buy low and sell high, easily said, but you never know how low they might go so don’t risk what you can’t afford to lose. You need to be patient. Buy low, don’t be drawn into a stock rapidly ascending, it might be near a peak. Rising from a valley is more often safer, but no guarantee. Good luck as well as dilligence pays off!

  28. I recently inherited 6250 BAT shares which at today’s price of 2522.85 values these at some £157.000 and the twice yearly dividends are also very attractive. My problem is however I’m very anti-smoking . Can anyone suggest a suitable share that is as attractive but without the headache of guilt attached? I’m new to all this!

  29. Gail, I am not trying to be funny, but you really need to be very competent with decimal places before you invest in shares. My advice: research and don’t put all your eggs in one basket. If you have the sort of money I think you have to invest, you should be looking for advice from several sources and make decisions very carefully. Too easy to lose the lot. Find some friends who has been successful and make it worth their while to share their advice with you perhaps. Don’t trust anyone who has particular interests.

  30. Alan, thanks ~ have I got my maths wrong then? Silly mistake if I have and I agree I need to get the basics right first! But checked again 6250 shares @ closing price 2538.50 = £158,656.25 ? or what? I’m confused!
    Appreciate the need to get several sources of advice but talking stocks & shares with friends is not my scene. Perhaps I’ll just start with decimal points and see how I get on! Does anyone have an abacus I can borrow?

  31. Gail, you put a full stop where there should have been a comma, that’s all. £157.000 is very different from £157,000 Best of luck!

  32. Full stop or comma – what does it matter? One hundred & fifty seven thousand pounds whether you write it in numbers or letters still equates to the same figure! Using a comma or full stop doesn’t change the value ~ Or am I REALLY missing something here? Please someone do the maths for me!!!
    Sorry to get pedantic but if I am to have a successful bash at this Investment game I need to be confident that its not me getting my sums wrong!
    Anyone else hear where I’m coming from?

  33. Call me pedantic if you will, but I think you will find that a full stop is only used as a decimal place indicator and should never be used as a thousands divider unless you first make it clear that you are talking about thousands. Legal documents or online forms may take facts as facts and not be flexible enough to interpret a full stop as a comma. I certainly wouldn’t want to risk it anyway.

  34. I have to agree with Alan. I think you would find it confusing if not difficult to read a row of large figures if the full stop rather than the comma was used as the thousands divider.

    These things are probably convention rather than absolutes but they are what people understand. I fear in the future textspeak will become more common even in legal docuuments which will lead to more misunderstandings and then of course more work for lawyers.

  35. I bought shares in churchill mining a while back for about a pond each. they were going well up to around 140 pence ,but fell back dramatically. they are now around 21 pence. having looked on their comments,it said it was due, to legal matters involving licences to mine in that country.they are now going to court to appeal, as they say they have done nothing wrong. the fair way for shareholders would have been to suspend shares, till the outcome of the court decision, dont you agree?

  36. I also bought shares in Churchill Mining. the shares were suspended for a while. Initially the issue appeared to be straightforward – an adminstrative tribunal had ruled on the overlap of their licences with another company and also their alleged mining in forestry areas. Churchill rubbished all this at first, but now it appears that some letters from the authorities were not disclosed to the Churchill Board by the local agents in Indonesia. Churchill is now mounting an appeal with the supreme court in Jakarta. I am not particularly hopeful. I lost all my investment in Irish Life and Permanent after the stress tests and think this one is going the same way.
    suspending the shares until the courts ahd ruled would have been a fair result.

  37. kenmare shares still growing at a good pace, and can’t
    see any slowdown yet, i bought at 21p few months ago,
    at this moment they are just over 50p


  38. my last message was on the 7th feb, about kenmare minning shares they are still going very well, i paid 21p few months ago, today just over 50p, lot more growth to come (hopefully) will keep my eyes on them.

  39. I bought shares in EO. when they were just under 118p. They climbed steadily to 151p, now have dropped to 67p!

    Oh dear, what shall I do? Should I hold tight, or buy some more?

  40. Nita, you shouldn’t put too many eggs in one basket. There is a time to ‘average down’ but I don’t know enough about the current situation of EO to comment. At this moment, Range Resources looks good at under 15p but DYOR [do your own research].

  41. Chris Mitchell

    Gail if you really wish to offload 6000 odd BAT shares valued at £157,000 pounds due to your being ‘anti smoking’ – your biggest problem could be the amount of Tax payable. Such a sale would likely attract a high figure in the form of Capital Gains tax, which would greatly reduce your £157,000 and therefore available cash for reinvestment by you in more ‘acceptable’ shares.

    Whilst you may feel that BAT is not an ‘acceptable’ share because of it’s product-it is nevertheless a very well managed Company whose RONA ( Return on Net Assets) is quite high and not so achievable by other Companies. As you also state their twice yearly dividends are attractive as well and a major reason why we the ‘punters’ continue to hold shares in this Company.
    After all we are investing for returns and profit! You don’t necessarily have to smoke or agree with it-but there are millions out there who do and want to continue. Govt legislation has tried to stop them for many years. Quite unsuccessfully, why-because people want to do ‘their own thing’. Not everyone wishes to eat chicken but you would not stop investments in their production if it was profitable, I am sure.
    Someone has invested hard and no doubt long in those shares which you have been fortunate enough to inherit. I sincerely hope you do not lose a considerable amount of money, because of your so called conscience.

    Incidentally all the other guys were correct in what they had to say about commas and full stops. Just get the hang of it.
    Best of luck with how you handle such a sum.


  42. SHG…
    near term gold producer-December 2011, fully funded, undervalued, under the radar, broker says 300% upside in the short term…dyor

  43. Gail won’t have a capital gains tax problem as she inherited her shares at a value of £157k. This is her base cost so she only pays tax on any increase, subject, of course, to her annual exemption allowance of £11,100 which is tax free.

  44. Surely no-one actually takes heed of the “tips” that appear in the comments published here? They are totally unrelated to the article and it must be obvious that the individuals concerned are trying to promote their own selfish interests. Something should be done to ban them or at least remove them as soon as they appear.

  45. I suppose everone will be piling into Thomas Cook hoping to double their money, I’m keeping away from it having burnt my wallet on Ferranti shares many years ago!
    Good luck to anyone who has a punt on this double or quit opportunity!

  46. Mike in Spain

    The Share Centre are recommending Monitise as a strong buy yet two of the Directors have been selling this month. Any views?

  47. The Share Centre

    Thomas Cook
    Massively risky, you know your downside (potential to lose all your capital invested), a good chance a rescue package would seriously dilute current shareholders value.

    Goldman Sachs has today raised the stock from a Sell recommendation to Neutral with a price target of 14 pence.

  48. Nearly a year has gone by since I dipped my toe into the ‘shark infested waters’ and began, somewhat reluctantly in DMOR & trying to understand the Stock Market game. Call it beginners luck or a downright naiive gamble, but having inherited 6250 BATS.L at a base price of £114k 4 years ago saw the price steadily rise to a value of 157k in April ’11 to now £198k . Happy to report I bought another 2000 when at £157k , so is this beginners luck or have I understood more than I think ? All eggs in one basket though, not good, so am venturing out in search of another gem ~ BATS, I’ll eat my words, my conscience ? Doing nicely thank you!

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