views

THE TIPSTER TIME TO GO DEFENSIVE IN YOUR PORTFOLIO

Kathleen Brooks
VOLATILITY has been rising since the start of this year and all of these extreme moves can make investors dizzy. Now is a good time to switch to a more defensive stance on equities and invest in the likes of supermarkets and energy providers. These companies tend to perform strongly when risk aversion returns to the markets. Centrica announces its preliminary results on Thursday and could provide a buying opportunity. Capital Spreads quotes a price of 276p-276.8p.

Associated British Food has seen its share price increase by nearly 45 per cent since February 2009, thanks to the performance of high street retailer Primark, which it owns. It has also benefited from the upswing in sugar prices from its British Sugar Group. The stock hit a new high of 933p on Friday ahead of today’s trading statement, and the outlook for earnings looks good.

Analysts expect Primark to have enjoyed a strong performance during the Christmas period as shoppers have been attracted to its discount prices during the downturn. Since the outlook for the UK economy remains bleak, customers are expected to continue flocking to the retailer in search of bargains, which should fuel strong results in 2010 for its parent company. Spreadex has a June-based contract with a spread of 929.4p-936.5p.
Homebuilders have been at the sharp end of the economic downturn as more people delay making a house purchase. As a result, some of the biggest names in homebuilding have seen their stock prices collapse. However, some people think that prices have fallen too far. We will get more clarity on the health of the sector on Wednesday when Barratt Developments announces its interim results. After a sharp drop in activity during the crisis, Barratt is promising to build more houses in 2010 and to improve margins. Trading at around 117p last week, the stock has fallen from the highs of 193p reached in September 2009. However, considering that its share price was above 800p three years ago, there could be more potential for upside in its stock price if the sector is in recovery mode. ShortsandLongs.com has a rolling spread of 116.9p-117.5p.

For any keen anglers out there, a crisis in the fishery world could offer an opportunity to make some profit. Salmon prices are soaring as disease sweeps through stocks in Chile. This should translate into good news for Harvest Marine, the Norway-based company which is the world’s largest salmon farmer. Shares have already started to nudge their way higher, and scope for more upside cannot be ignored. Although the stock price is quoted in Norwegian krone, IG Index lets clients buy or sell in pounds per point, which eliminates the exchange rate risk. The current IG Index price is 535.5p-537.5p.