With the Euro Crisis still making the headlines and no end in sight, world markets remain in turmoil. Knowing where to invest is a big issue many are facing. In this post I’ll share 3 stocks I’m investing in in 2012 and explain the reasons I’m investing in them.
1. Apple
I recently wrote about the 7 reasons to invest in Apple. When I look around companies to invest in there really aren’t that many at the minute where I feel comfortable in their ability to keep customers buying more of their products during a global recession.
It’s two main products (iPhone/Smart phone and iPad/tablet) are both in markets that are experiencing rapid global growth. In both markets Apple is positioned at the premium end of the market, the company that is setting the benchmark for al others to follow.
Apple’s recent history of product development, and in fact market creation (think iPod, smart phone, tablets) is phenomenal. It has a history of creating products that become must haves for customers and I see no reason for this to stop. While it doesn’t currently pay a dividend I think there is potential for strong future growth.
2. BP
BP has been through a tumultuous couple of years. After seeing it’s share prices crash following the Deep Water Horizon drilling disaster in the gulf of Mexico (when the stock plunged from about £6.50 down to about £3.05
Perhaps one of the best reasons to own BP at the minute is because of it’s dividend yield of 3.64%. With global economies struggling for growth and interest rates across the developed western economies at an all time low such a high yield is an attractive prospect.
Post crisis the company had to raise significant capital in order to fund the clean up and reserve against future litigation and claim. As a result the company sold of many of it’s non-core assets. At the time the market deemed this necessary however in the long run I believe it forced BP to shed it’s non core assets. As a result the company is leaner than it was pre-crisis and is now focusing on it’s core competencies of exploration, deep water extraction and managing large oil fields.
The cynical would say that Uncle Sam’s thirst for Oil far outweighs their outrage at the company for the handling of the disaster. The facts are that drilling for oil has now resumed in the Gulf of Mexico.
In summary I view BP as having both good growth and yield potential. It’s re-focused strategy and recovery post crisis has the potential to offer the investor capital growth while at the same time the company is back to paying decent dividends.
3. Vodafone
While Vodafone is susceptible like most companies to a global slowdown, it is ell placed to be less affected than most. The way the mobile industry works is to tie in customers to increasingly long contracts (2 years is now common practice). Vodafone’s market share and expansion into Emerging Markets means it is well placed to resist any economic downturn.
You can see Vodafone’s defensive nature in it’s historic stock price. In the short term while the Euro crisis has been developing and markets have been plummeting it has traded steadily in the range of 160-170. In fact in the last 6 months the price trend has been an upward trend.
Finally, as with BP the dividend yield of Vodafone is a very attractive 5.19%. With interest rates at an all time low this type of yield is a must for any portfolio.