The Share Centre’s top 10 tips to weather market dips

Retail stockbroker, The Share Centre is encouraging investors to remain cautious, yet positive about the ongoing market fluctuations by reminding them of the benefits of drip feeding money into the market.

The Share Centre has also identified ten stocks which may appeal to those wishing to minimise risk or seeking value.

Nick Raynor Investment Advisor at The Share Centre said: “Investors who are wary of equities at present, but still wishing to invest may want to think about gradually investing money into the market via a drip feeding approach. This strategy can help investors to reduce the risk of entering positions in overpriced securities, since the investments are spread out. It can also help to smooth out market fluctuations as the investor will benefit from pound-cost averaging (a fixed contribution each month will result in more shares being purchased at low market prices than at high prices).

“At the moment, many investors are likely to be put off by equities as market volatility has really hit people’s confidence. It’s important that they continue to regularly review their investment strategies as well as their portfolios”.

Raynor highlights ten stocks which may appeal to cautious investors or for those looking for value in an uncertain market:

1. National Grid
2. Pennon
3. Northumbrian
4. BT
5. Tesco
6. BAT
7. Lloyds TSB
8. Land Securities
9. ABF
10. Reckitt Benckiser

National Grid, Pennon and Northumbrian

In terms of sectors, we like utilities and water, and would recommend National Grid (NG.), Pennon (PNN) and Northumbrian (NWG). National Grid has a good history and track record. As for Pennon and Northumbrian, there has been a lot of corporate activity going on so there may be potential for a takeover.

BT

BT’s (BT.A) recent underperformance makes it an even more attractive proposition; shares have been falling since November reflecting on weakening markets and concerns over future growth in a competitive area. However, some 40% of its revenues come from 'new wave' products, primarily broadband, of which it is once again the leading retail supplier in the UK. Income seekers will be encouraged by the 7 pct yield and longer term attractions remain, but in the present climate we would suggest buyers only drip feed into the stock.

Tesco

Tesco (TSCO) is a classic defensive stock. Although we have been wary of their exposure to the US we are pleased to hear Tesco is taking the time to reconsider this venture. In the meantime the opening of its first store in Russia seems to be doing well. Anyone looking for a stable and long-term investment should look no further than this huge retailer. The dividend is also starting to increase at an attractive rate and should start to appeal to income seekers.

BAT

British American Tobacco (BATS) the international manufacturer of cigarettes and tobacco products is renowned for its defensive properties. And despite a wave of consolidation in the sector the company has so far been a predator not prey. In the current markets its commitment to increased dividends and long-term organic growth look particularly enticing - a buy for income seekers and the risk averse.

Lloyds TSB

For more risk-hungry investors, I would say that some financial stocks, in particular Lloyds TSB (LLOY) pose opportunities. The bank offers good dividends and its lack of exposure to the subprime markets offers reassurance for investors. Although the FTSE 100 isn’t as reliable as it used to be, the big banks show a lot of potential for the next two or three years having one of these in your portfolio is worth considering if you are a contrary investor.

Land Securities

The decision to split up Land Securities (LAND) £15 billion property portfolio into three separately quoted businesses should prove attractive as the company looks to return value to investors. Private equity firms are said to be interested in the ‘trillium division’. Due to on-going market volatility this should be seen as a long-term investment (it may be advisable to drip-feed money into its shares) but still a worthwhile buy.

ABF

Associated British Foods (ABF) is a diversified food producer with interests in grocery, agriculture, ingredient manufacture and retail. We have long been admirers of ABF’s slow and solid approach and its past results. Although its sugar division is looking decidedly unfashionable, the group’s budget clothing retailer Primark continues to sparkle. Primark’s recent figures show that they now command just over 10% of the current clothing market, quickly gaining ground on traditional retailer Marks & Spencer.
Reckitt Benckiser

Reckitt Benckiser (RB.) is the world’s largest household cleaning products group, owning brands such as Cillit Bang, Vanish, Harpic and Airwick. Reckitt’s increased their targets for full year results and duly hit them. The company’s strategy is simple and well executed, so as long as core products remain strong the constant stream of innovations should keep sales moving upwards. Even on a steep earnings multiple there is plenty of long-term potential.

To see The Share Centre’s view on all FTSE100 shares please visit share.com. Registration may be required.