The turmoil suffered by equity markets in December 2018 has raised the question as to whether the near decade long bull market is over. There certainly is quite a lot to worry about in the wider global economy, with consumer debt and house prices looking too high and the expansion of debt in China a further cause for concern. In spite of factors at home and abroad however, I find myself feeling surprisingly optimistic about sections of the UK stock market.
My preferred high-quality shares (growing businesses with high profit margins, returns on capital and strong free cash flows) look expensive and a very crowded trade. I can, however, see pockets of value in shares that were heavily beaten up in 2018 and a lot of pessimism has been baked into their prices. Could 2019 be a year for contrarian value investors?
Companies discussed in this week's report include:
- Ted Baker (TED)
- Greggs (GRG)
- Taylor Wimpey (TW.)
- MJ Gleeson (GLE)
- Nichols (NICL)
- Greene King (GNK)
- Dunelm (DNLM)
I examine the case for each company and assess which shares look like offering genuine value.
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