It's been a mixed year for our experts. James Ridgewell of New Star Asset Management tipped Kensington, the sub-prime mortgage lender acquired by Investec for a fraction of its spring 2006 value. The company eventually delisted from the London Stock Exchange, leaving Mr Ridgewell with the wooden spoon.
RAB Capital's Philip Richards tipped wait for it RAB Capital and joins Mr Ridgewell at the bottom of the table, as the company's stock lost more than 16 per cent over the past year.
The bottle of champagne goes to Makis Kaketsis from F&C Asset Management, who tipped Velti, the telecoms service provider, whose stock rose by a spectacular 72.51 per cent. Resolution Asset Management's Ralph Brook-Fox also deserves a glass of bubbly for selecting Rolls-Royce, the engineering group, which soared 24.35 per cent on the back of a strong order book.
This year's panel and their tips are:
Charles Luke, Aberdeen Asset Management
Daily Mail and General Trust is best known for its eponymous newspaper, but the company also has a broader variety of media assets including an exhibition and business-to-business (B2B) operation. Given cyclical concerns, the shares trade on a very low valuation multiple. However, we believe the picture is much brighter due to the attractive long-term growth opportunities available within B2B and the potential for margin improvement across the newspaper titles.
Ralph Brook-Fox, Resolution Asset Management
Rolls-Royce. A formerly cyclical company with a stretched balance sheet has been transformed into a strong growth business with excellent finances, and the forthcoming challenging economic environment should provide an ideal opportunity for the company to demonstrate these qualities to the market and get the re-rating it deserves.
David Keir, Scottish Widows Investment Partnership
Like many other companies with exposure to the UK consumer, Enterprise Inns has seen its share price come under pressure since mid 2007 on the fear that a slowdown in the UK economy could lead to a retrenchment by the consumer. Despite that potentially difficult background, Enterprise looks to be in the enviable position of still being able to deliver strong growth in earnings per share.
The growth will come from a combination of an increase in core operating profit, which will be supplemented by further acquisitions, and the possibility of value generation through refinancing and continuation of the share buyback programme.
David Sheasby, Martin Currie
In buying Safeway in 2004, Sir Ken Morrison bit off more than he could chew. Integrating the new stores proved harder than imagined, and the bout of indigestion that followed proved difficult to shift. But that dyspeptic episode is now firmly behind it, and a rebranded, reinvigorated Morrisons appears ready to reward investors in 2008. Morrisons used to promise shoppers "Quality and Value" and, at least in investment terms, we believe it still does.
Richard Hallet, Hargreave Hale
My tip for the year is Asos, the online fashion retailer. The company has made a lot of investments in its business, and despite the problems in the retail sector I think they will do well. It's a good business and operates in an industry where the barriers to entry are quite high.
Simon Gergel, Allianz Global Investors
The pharmaceutical industry has suffered in recent years from patent expiries on key drugs, limited success in new drug development and government pressures on health budgets. GlaxoSmithKline has been hit with the rest of the industry, but has now developed a large pipeline of potential new products, many of which have key trial results over the next 18 months. With a high level of economic uncertainty in 2008, the defensive qualities of GSK and its strong cash flow could prove to be very attractive.
Euan Stirling, Standard Life Investments
One of my picks for 2008 is the insurance company, Aviva. The group has an all-new management team and a revised strategic priority, targeting maximum returns from its existing businesses. I would expect 2008 to see a resolution of the dispute the company is having with its Dutch subsidiary, Delta Lloyd, and would hope the improved cash generation of their life assurance operations might allow a review of their composite structure, which may in turn crystallise more value.
Henk Potts, Barclays Stockbrokers
BHP Billiton remains our preferred UK mining stock. The takeover approach for Rio Tinto is strategically sound. We are convinced of the diversity, quality and growth prospects of the group's metal, bulk commodity and petroleum assets the risk/reward balance continues to warrant a positive view.
Stock picking is like a box of chocolates ...
This year, we asked Harry Prosser, aged two and a quarter, to test his stock picking skills, with the aid of a copy of The Independent's share pages and a blue felt-tip pen. Worryingly for stock market investors, Harry, the son of our deputy business editor, David Prosser, at first refused to countenance equity holdings at all for his portfolio during 2008, preferring to scribble on the sports pages. When pushed, however, Harry was able to see value in a handful of stocks for the year ahead.
An avid fan of chocolate, Harry backs Cadbury Schweppes to recover from its recent difficulties product recalls, factory closures and M&A trouble. He also picks another recovery story, tipping ITV, which may finally be turning the corner under the stewardship of Michael Grade (though Harry is less than impressed with the new man's decision to drop children's shows in the afternoon).
Elsewhere, Harry is inclined to be defensive. His pick of the food retailers is WM Morrison, a choice that may or may not have been influenced by its clever decision in at least one outlet to install a Postman Pat ride just beyond the checkout. British Energy, the power generator, is his favoured utility.
Harry has confidence in bricks and mortar. He recommends shares in housebuilder Persimmon and real estate giant Hammerson. A keen developer himself of building blocks he thinks talk of a property downturn has been overdone. Finally, he tips Lloyd's of London insurer Benfield, and, to spice things up with something a bit more risky, Alphameric is his pick of the small caps.Reuse content