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The inventory market delivered robust returns for buyers within the first half of 2024. Proudly owning a well-constructed diversified portfolio, meant it wasn’t laborious to generate a return of 10%, or extra.
As we begin the second half of the 12 months, I stay bullish on shares. Nevertheless, there are a couple of areas of the market that look actually fascinating to me proper now.
Dividend shares
Dividends aren’t my important space of focus. With 15-20 years till retirement, I’m primarily searching for development (and never earnings) in the intervening time.
Nevertheless, wanting on the market right this moment, the outlook for dividend shares is engaging, to my thoughts. That’s as a result of rates of interest are more likely to fall within the second half of the 12 months.
As charges come down and savers uncover that they will’t get the identical degree of curiosity on their money financial savings, dividend shares ought to come again into focus. Particularly people who have a historical past of dividend will increase. This could push share costs up, resulting in engaging complete returns (beneficial properties plus earnings) for buyers.
One dividend inventory I like (and personal) is Unilever. It doesn’t have the very best yield, however I reckon it ought to do properly general as charges fall.
The healthcare sector
A sector I just like the look of as we begin the second half of the 12 months is healthcare. It lagged the general market in H1 and I reckon it might play catch-up in H2.
One motive I like this sector is that it stands to learn from portfolio rebalancing. As buyers take income from tech and redeploy them into different areas of the market, it may do properly.
One other is that there are some superb improvements inside the healthcare area proper now. From robotic surgical procedure to weight-loss medicine that may assist folks lose as much as 20% of their physique weight, we’re seeing plenty of thrilling developments.
To extend my publicity to the sector, I’ve lately been channelling capital right into a healthcare fund. This provides me publicity to round 70 shares throughout the trade.
UK mid- and small-caps
Lastly, I believe mid-sized and smaller UK firms look fairly engaging proper now. These areas of the market had been smashed when rates of interest rose a couple of years in the past. If charges come down within the second half as predicted, these shares may expertise a serious rebound.
One inventory that stands out to me on this area is Gamma Communications (LSE: GAMA). It’s a number one supplier of enterprise communication options.
Earlier than rates of interest spiked, this inventory was buying and selling above 2,300p. As we speak nonetheless, it may be snapped up for round 1,400p.
That’s a pretty worth for this inventory, in my opinion. Taking a look at analysts’ earnings estimates, the forward-looking P/E ratio is simply 17.5 at current, which could be very affordable given the corporate’s fee of development (analysts anticipate 9% income and earnings development this 12 months).
After all, an financial slowdown stays a threat right here. This might end in companies spending much less on new know-how.
Taking a three-to-five 12 months view nonetheless, I reckon this inventory ought to do properly. It’s price noting that analysts at Berenberg have a worth goal of 1,980p on it. That’s 40% increased than the present share worth.
