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The inventory market delivered sturdy returns for traders within the first half of 2024. Proudly owning a well-constructed diversified portfolio, meant it wasn’t onerous to generate a return of 10%, or extra.
As we begin the second half of the 12 months, I stay bullish on shares. Nonetheless, there are a couple of areas of the market that look actually attention-grabbing to me proper now.
Dividend shares
Dividends aren’t my principal space of focus. With 15-20 years till retirement, I’m primarily in search of progress (and never earnings) in the meanwhile.
Nonetheless, 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’ll’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 (good points plus earnings) for traders.
One dividend inventory I like (and personal) is Unilever. It doesn’t have the best yield, however I reckon it ought to do effectively total 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 could play catch-up in H2.
One motive I like this sector is that it stands to profit from portfolio rebalancing. As traders take income from tech and redeploy them into different areas of the market, it may do effectively.
One other is that there are some wonderful improvements inside the healthcare area proper now. From robotic surgical procedure to weight-loss medication that may assist individuals lose as much as 20% of their physique weight, we’re seeing quite a lot of thrilling developments.
To extend my publicity to the sector, I’ve just lately been channelling capital right into a healthcare fund. This provides me publicity to round 70 shares throughout the business.
UK mid- and small-caps
Lastly, I feel 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. At present nonetheless, it may be snapped up for round 1,400p.
That’s a lovely worth for this inventory, in my opinion. analysts’ earnings estimates, the forward-looking P/E ratio is simply 17.5 at current, which could be very affordable given the corporate’s price of progress (analysts anticipate 9% income and earnings progress this 12 months).
After all, an financial slowdown stays a danger right here. This might lead to companies spending much less on new know-how.
Taking a three-to-five 12 months view nonetheless, I reckon this inventory ought to do effectively. It’s price noting that analysts at Berenberg have a worth goal of 1,980p on it. That’s 40% greater than the present share worth.
