Hot stocks for 2013

Three companies near the bottom of NZX50 companies for performance this year are being plumped as stocks to watch in 2013.

Broking firms Hamilton Hindin Greene, Craigs Investment Partners and Forsyth Barr, as well as fund manager Brook Asset Management, provided NBR ONLINEwith their top three picks for 2013.

Three companies have emerged as favourites – PGG Wrightson, Mainfreight and Fisher & Paykel Healthcare.

That is despite their returns to shareholders being in the bottom 15 of NZX50 companies, as compiled by NZX Data.

According to the NZX Data figures (see RAW DATA below), all but four NZX50 companies had positive total shareholder returns between January 1 and December 7 – which includes share price fluctuations and dividends paid.

The standout was Fisher & Paykel Appliances, fuelled by Chinese firm Haier's successful takeover. However, the company was delisted in November and replaced in the NZX50 by Steel & Tube Holdings.

Hamilton Hindin Greene director Grant Williamson says a strong year for the sharemarket makes it harder to pick winners in 2013.

"Quite a few of them look fully priced. We're looking at those stocks that have good recovery prospects; stocks that haven't performed that well in 2012."

The entire New Zealand sharemarket had a dividend yield close to 6% this year, say Craigs Investment Partners head of institutional equities Geoff Zame and head of private wealth research Mark Lister.

"While the economy might remain sluggish, earnings growth for the NZX50 is forecast to be close to 10% next year."

Brook Asset Management's chief investment officer Andrew South says he is not relying on 2012 performance as yardstick for 2013.

"We're looking at where these companies are positioned going forward."

A similar brokers’ tipping exercise last year shows the benefit of a diversified portfolio.

McDouall Stuart, which picked Diligent, was dragged down by Cue Energy, while Macquarie Securities’ gains from Pumpkin Patch were undone by Chorus and Transpacific Industries.

The average performance of the seven firms was 35% returns, highlighting the strength of the sharemarket.

The winner was Forsyth Barr with an average of 69.4% return, from Chorus, F&P Appliances, Fletcher Building, Ryman Healthcare and Sky Network Television.

2013 stocks to watch

HAMILTON HINDIN GREENE

• PGG Wrightson
• Chorus
• Tower
   

FORSYTH BARR

• Mainfreight
• PGG Wrightson
• Sky City
   

CRAIGS INVESTMENT PARTNERS

• Fisher & Paykel Healthcare
• Ryman Healthcare
• Diligent Board Member Services
   

BROOK ASSET MANAGEMENT

• Fisher & Paykel Healthcare
• Summerset Group Holdings
• Mainfreight

DISCLAIMER: Information in relation to these stocks to watch is intended as general information and not financial advice. Readers should obtain professional advice before making investment decisions. Copies of disclosure statements of NZX adviser firms mentioned in this article can be obtained by contacting the firms.

For more details see this week's National Business Review Print edition.

dwilliams@nbr.co.nz

RAW DATA: NZX50 stocks ranked by total shareholder return for 2012