London’s markets have managed to notch up solid gains by the end of 2021, with the FTSE 100 closing 14.3pc higher – the best yearly rise since 2016 – having shaken off a couple of rough patches.
When it came to picking stocks that rode the rising tide, The Telegraph’s Business reporters were on the money. Calculated on a pure price change basis, our portfolio picked at the end of 2020 rose 16pc, outperforming the FTSE 100 and the mid-cap FTSE 250, which gained 14.6pc.
Greggs was our standout pick, mostly redeeming deputy economics editor Tim Wallace for his ill-fated selection of Lloyds Banking Group the previous year. The pasty maker’s share price has nearly doubled as Britons returned to their workplaces. Second was chief City columnist Ben Marlow’s choice of software giant Sage, which seems to be benefiting from accelerated digitalisation spurred by the pandemic. At the bottom of the pile was senior economics correspondent Tom Rees, whose easyJet dreams met a painful Covid reality.
This year, we’re coming back bigger, and hopefully even better. As ever, it should be noted that these selections are in the spirit of fun and not serious financial advice.
Matthew Field: Computacenter
My 2021 punt on gaming services firm Keywords Studios only just clawed its way into the green, so I’m hopefully playing it safer this year. Long seen as a “slow and steady” City constituent, Computacenter, which supplies laptops and other IT kit, has been a big pandemic winner. Mike Norris, chief executive since 1994, has provided six profit guidance uplifts in the last two years. In November it secured a contract for 500,000 laptops for UK schools. With the omicron crisis and a renewed focus on working from home, Computacenter should continue to enjoy high demand.
2021 pick: Keyword Studios (+2.9pc)
Lucy Burton: Man Group
It was a rough start to the year for hedge funds as they became the target of a trading frenzy against heavily shorted stocks such as GameStop. Man Group, Britain’s biggest listed hedge fund, responded by building a system that tracked popular topics on Reddit, the forum behind the assault. Its focus on machine learning and technology has helped it stand out in what is now a booming market. Money has poured in and the group’s shares have rocketed this year. With volatility ahead and the hedge fund industry red-hot, it still looks a good bet.
Russell Lynch: Shaftesbury
The return of remote working and fears of a stringent Plan C make it a tough time to tip a West End landlord. But investors should take a look at Shaftesbury, the owner of swathes of prime, central London. Before omicron, weekend footfall was back to pre-Covid levels even with a far smaller number of tourists. Rents are flowing in, demand is picking up and vacancy rates are plunging. Plus, property peer Capital & Counties owns a 25pc stake, raising the prospect of a deal. With shares still a third below pre-Covid levels, there seems plenty of upside.
2021 pick: Next (+15.0pc)
Laura Onita: M&S
Marks & Spencer first delivered a profit upgrade in August, and then raised its full-year outlook again in November. The upgrades, the only two from M&S this century, have raised hopes that its latest turnaround efforts are yielding results. The retailer is ready to chase growth as it modernises its stores. M&S’s food business has benefited from the tie-up with Ocado, too. Shares have soared more than 75pc in the past year, but the stock is underpriced if its revival plan stays on track.
2021 pick: WH Smith (-2.0pc)
Tom Rees: Games Workshop
Forgive me for last year’s optimism. Hopes that vaccines were a one-way ticket to the beach led me to foolishly pick an airline. This year’s pick is grounded in pessimism. Games Workshop, the tabletop games maker behind the wildly popular Warhammer, was a stock market darling before 2021 as it enjoyed a pandemic sales boom. Shares sank over the past year amid cost pressures but lockdowns are sure to boost sales again and the firm is expanding abroad.
2021 pick: easyJet (-20.4pc)
Rachel Millard: SSE
Renewables and power networks giant SSE has been attracting attention in and outside the boardroom of late. Hedge fund Elliott is agitating for a more ambitious strategy, while Storm Arwen plunged thousands of customers into darkness. Both challenges reflect the company’s role at the heart of the shift to cleaner energy. Elliott may not like chief executive Alistair Phillips-Davies’ strategy, but it recognises his strong bag of assets including Dogger Bank offshore wind farm. A dividend cut to fund growth is now priced in and predators and hedge funds are unlikely to let it rest easy. Shares have had a rocky year, ending up around 7pc. One way or another, there is room to grow.
Tim Wallace: B&M European Retail
Living costs are spiralling, wages are lagging and Covid is in the air. Gloom is all around as the economic recovery stutters. But fear not – a spot of retail therapy can provide some much-needed cheer. To avoid breaking the bank, a trip to B&M might be just the ticket. The stock itself is near an all-time high, but there is room for optimism here in a time of more general belt-tightening.
2021 pick: Greggs (+86.4pc)
Hannah Boland: Oxford Nanopore
Covid looks like it’ll be with us a while longer. For many companies that means gloomier prospects, but the opportunities have never been greater for Oxford Nanopore and its shares have risen around 14pc. During the pandemic, Nanopore’s kit has been used in a fifth of all Covid sequencing globally and it is well placed for the emergence of any new variants.
