Well it's that time of the year again when the share tippers come out of the woodwork. And one of the first out of the starting blocks this year is Leigh Himsworth, manager of RLAM's (Royal London Asset Management) UK Strategic Growth Trust.
The following are his favourite stocks for 2007 :
Worthington Nichols : A heating and air conditioning contracting company - demand is being driven initially by hotel chains wishing to retro-fit air conditioning, and on a longer term basis by legislation that will demand improved air conditioning systems that have reduced harmful emissions.
Clapham House : Restaurant chain with four brands, including Gourmet Burger Kitchen and Bombay Bicycle Club, both of which are now in the process of being aggressively rolled out throughout the South East.
Logica : May well exceed expectations as the underlying market is positive and the software company extracts synergies from recent acquisitions.
Northgate Information Solutions : The software services company has strong market positions and attractive multiples, which mean it could well attract further corporate activity, following the aborted bid in October.
Balfour Beatty : The construction services stock should continue to perform in 2007 with good visibility of earnings.
Himsworth says: "A common thread for all these companies is that they have a strong management team."
As for 2007 itself, Himsworth expects the global economy to slow, following a prolonged period of unusually strong growth. However, the chances of recession are low.
While UK inflation has moved above target this year, interest rate increases and the unwinding of fuel price inflation will help to bring it down next year. This will enable interest rates to remain low, he adds.
A key issue for next year will be how fast the global economy slows. If the slowdown is greater than expected, perhaps due to weaknesses in the US housing market, the equity markets will be hit through fears of recession. Conversely, if economic momentum picks up there is the attendant risk of higher inflation and interest rates.
Best Wishes to all and may it be a prosperous as well as healthy New Year for us all!
TTNY
