Can we expect stock market showers this April?

As the economy slides into its worst downturn for many years, retail stock broker The Share Centre, discusses whether April - traditionally the best performing month of the year - will live up to expectations in 2008.

And why, best performer or not, April could be a good time for investors to pick up shares that they may have considered too pricey in the past.

On average the market is considered to be stronger in April than in any other month. And past reports have claimed that from 1971 the market rose in April every year for 15 years. Although this may have been true in the distant past, analysis from The Share Centre shows that April’s performance, certainly over the last eight years, has been somewhat less predictable. However, despite this The Share Centre believe that early indications for April 2008 look positive.

Comparing the performance of the FTSE100 from 2000 to 2007 Nick Raynor, Investment Advisor at The Share Centre said: “Over the last eight years we have only seen April claim the crown of ‘best performer’ twice. The performance of the stock market can be hard to predict as it is open to so many external factors. We have seen at least two significant events in the last eight years, which have seriously impacted on the market - the height of the tech boom in 2000 and the repercussions of 9/11 (2001) which continued to knock investor confidence well into 2002.

“The current credit crisis is yet another example of an external factor which will continue to affect the stock market for sometime. However, despite this early indications for April 2008 look positive - the FTSE100 is currently up over 200 points on its starting price of 5702. And a lack of recent company announcements should mean that we can expect a period of consolidation and a reduction in volatility, as at present the market is unsure about which way to go – in this case no news certainly does seem to be good news.

“We don’t expect 2008 to be a stellar year for the stock market, but this will create plenty of opportunities for investors to pick up a bargain - it looks as though 2008 will be the year of the stock picker not the market follower”.

Raynor highlights a selection of shares for investors looking to unearth a stock market bargain at present:

Low-medium risk investors

British American Tobacco (BAT)

Sector: Manufacturer of cigarettes and tobacco products

View: BUY

BAT is renowned for its defensive properties (reasonable dividends, steady growth and a product in consistent demand) 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. BAT was trading at 2007p on the 9th January 08 and is currently trading at 1879p.

Medium risk investors

Northumbrian Water (NWG)

Sector: Gas, water and multi-utilities

View: BUY

To date Northumbrian says that they have not received a takeover bid or had any approaches, which means there is still room for a rise in bid premium (opportunity for the price to rise following any potential takeover announcements). The company was trading at 351p on the 9th January 2008 and is currently trading at 331p. The takeover speculation within the utility sector is still rife and we feel that Northumbrian would be highly attractive to a predator; therefore investors should look to buy for growth with the added attraction of a reasonable yield.

High risk investors

Lamprell (LAM)

Sector: Oil equipment services and distribution

View: BUY

Lamprell started life as a refurbishing and servicing rig operator and they are now a major player in the global market for outfitting production platforms, floating production and storage vessels. Key contracts have been signed in these areas and have recently boosted the order book to £290 million. Lamprell was trading at 448p on the 9th January 2008 and is currently trading at 402p.

This sector is a favourite of ours and Lamprell could be one of the new shining stars. Lamprell is currently listed on AIM but have expressed intentions of switching to the main market and an announcement is expected shortly.

Please note Lamprell shares trade on AIM and can not be held in an ISA.