Harvey Jones sizes up Anglo American (LSE: AAL), Centrica (LSE: CNA), British Land (LSE: BLND), United Utilities (LSE: UU.) and Resolution (LSE: RSL).
Shopping for shares isn't easy, there's so much on offer these days! I feel spoilt for choice. Here are five stocks I've added to my basket lately, but should I buy?
When I recently posed the question whether I should buy Anglo American (LSE: AAL), I decided this mining giant was a diamond in the rough. Anglo American has been through a rocky year, with its shares subsiding from a peak of £29 in February to less than £17. Falling commodity prices, wildcat strikes in South Africa and the forced exit of chief executive Cynthia Carroll all weighed heavily on its prospects. Yet I quite fancied the stock at the time, which looked modestly valued at 11.9 times earnings and yielded 2.8% with a progressive dividend policy. Late November now looks like it was the ideal buying opportunity. The share price since risen to £18.58, on improving investor sentiment and fiscal easing in the US and China. This has whittled down the yield to 2.4% and pushed up the price-to-earnings (P/E) ratio to 14 times earnings, so it's not as nicely valued as it was. But if you're bullish on 2013, this commodity giant could be a good way to play the recovery.
Life's a gas
Should I buy Centrica (LSE: CNA)? Last time I looked, I couldn't get excited about this stock. Centrica, which owns British Gas, should be a defensive play, but it isn't immune to a slowing economy, with cash-strapped households are less inclined to invest in new central heating. I was also worried that rising home energy bills would force regulators to get tough on gas and electricity suppliers. But now I think my assessment was harsh. Rising residential gas consumption, three new North Sea acquisitions, plans to buy cheap shale gas in the US and an eminently sensible decision to pull out of nuclear power all made compelling reasons to buy. As did its 5% yield, progressive dividend policy and forecast P/E ratio of 12 times earnings. The market appears to have come to the same conclusion. Centrica's share price has subsequently shot up faster than your heating bill, knocking that yield back to 4.6%. Should I buy it? Yes, a fortnight ago.
I've been thinking about grabbing a piece of British Land (LSE: BLND) ever since the financial crisis, without ever making an attack. My recent look at the stock, 'Should I Buy British Land?', also found me stranded in no-man's land. Down from £10 before the crisis to around £5.46 today, this real-estate specialist remains a tempting target. British Land mostly owns retail centres and prime London office space, has been posting halfway decent results, and has bold plans to add more than 200,000m of London office space over the next couple of years. So what stopped me? At the time, there was much fuss in the press about the City of London losing its mojo, thanks to higher tax rates, EU regulation and competition from the Far East. That has faded for now. While wandering around the City last weekend, I saw the British Land logo standing proudly over several massive building sites. Maybe now is the time to fix bayonets.
A splash of water?
Like energy companies, water companies also have to keep the regulator happy. United Utilities (LSE: UU) has done a good job of that lately, and management remains confident of delivering its regulatory performance targets right through to 2015. But as that deadline approaches, things will become more uncertain, as we wait to see Ofwat's plans for the sector. This uncertainty deterred me from taking the plunge last time I asked whether I should buy United Utilities, when I sided with booze-soaked comedian WC Fields, who famously wouldn't touch water. Taking a more sober view. I like its 4.6% yield but loathe its pricey valuation of 17 times earnings. I feel there must be better yield prospects out there.
See the mighty fallen. When I recently looked at insurer Resolution (LSE: RSL), it was yielding a barely credible 9.43%, the biggest in the FTSE 100. Today, it yields just 8.1% (actually, that's still pretty stonking). My answer to the question 'should I buy Resolution?' was 'no thank you', with brokers rushing to downgrade its prospects, blaming an attractive valuation and disappointing international performance. But investors have shown greater resolve, pushing up the share price, and broker Prime Markets recently labelled it an "increasingly solid recovery play". Resolution, which is now putting the finishing touches to its simplified board structure, is up 25% since July, and it still offers a pretty stonking yield. But for how much longer?
A rising tide lifts all boats, they say, and these five stocks have benefited from the recent market rally. But they aren't the only blue chips riding high at the moment. If you want to discover more big-name high rollers, then download our special in-depth report 'Eight Top Blue Chips Held By Britain's Super Investor'.
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> Harvey doesn't own any of the shares mentioned in this article.