Apple
Apple is one of the world’s highest-quality businesses. Its smartphones are the most popular on the market and in the past decade it has grown into a leader in wearable technology, from the Apple Watch to AirPods. This has rewarded shareholders handsomely, with returns of more than 200 per cent in the past five years. But the nagging question remains at the back of investors’ minds: can Apple really keep growing at this rate?
Rolls-Royce
Once a laggard in most DIY investor portfolios, Rolls-Royce is now ranking around the top of brokers’ most popular stocks. Just over a year ago Tufan Erginbilgic started at the business, with the new chief executive claiming it had been “grossly mismanaged” for years. Since he took charge, the shares have almost quadrupled in value, but can it last?
Scottish Mortgage Investment Trust
Scottish Mortgage has a simple philosophy: buy the companies that are at the forefront of a structural change and you end up winning in the long run. Think electric cars, social media or cloud computing. These ideas delivered beautifully in the 2010s, when the low cost of borrowing helped to support dizzying growth in its portfolio.
The question for investors is whether the trust can repeat this stellar run. Interest rates are much higher and growth investors have suffered. Scottish Mortgage shares languish well below their pandemic-era peak and trade at a discount to their net asset value. This is not a good look for one of Britain’s most popular investment trusts.
Gilts
Long gone are the days when one could nip to the local Post Office and buy some of our government’s debt, but DIY investors are still hungry for gilts. Purchases of British bonds are among the most popular investments on the biggest brokers. This stampede into government debt is unsurprising, given that gilt yields are now north of 4 per cent. However, are gilts really that attractive compared with the rest of the $133 trillion global bond market or is there a pesky home bias at play?
Diageo
Guinness nabbed the title of Britain’s most popular pint last year. The black stuff is more than two centuries old, long associated with St Patrick’s Day and Six Nations rugby, but the stout is gathering more and more young fans, particularly women.
Its owner, Diageo, is decidedly out of favour with the stock marke. In the past year, the drinks group, which also owns brands such as Tanqueray gin and Johnnie Walker whisky, has lost almost a quarter of its value. In fact, shares in the FTSE 100 company are now valued around decade lows. something that has caught the attention of some eagle-eyed retail investors. The stock now ranks among the most popular “buys” with some big brokers. Are savers being lured into a value trap?
M&G
M&G is in the unusual position of having a highly profitable business completely closed to new customers. Its “Heritage” legacy life insurance business made almost £500 million in operating profits in its last financial year, but it is in the smaller asset and wealth management businesses where Andrea Rossi, the recently installed chief executive, sees growth. Rossi, who joined the business less than two years ago, has been steering the company in this direction, dramatically improving his fund managers’ performance, cutting costs and simplifying organisational structure. The full works.
Nevertheless, it’s a London-listed insurer so there is really only one thing that investors are after: a nice, fat dividend cheque. The yield has hovered around double digits for much of the past year, but the key question is whether these cash payouts are sustainable.