Share Tips Update: CMC Markets, General Dynamics

December is always a bit of a slow month for trading. The Santa Claus rally towards the end of the year boosted share prices, especially in the large caps space, as investors focused on the possibility of interest rate cuts in the New Year. It has been a good year for US stocks, with the S&P 500 up over 20% for 2023.

Looking ahead, interest rates and geopolitical risks are likely to dominate equity markets in 2024. The election cycle is upon us already, but inflation seems to be dropping in major economies. Speaking to fund managers at our inaugural investor event in London in November, there seemed to be a consensus that small caps are hideously undervalued and that this represents a once in a generation opportunity to pick up some amazing bargains.

The sea of red in the small cap portfolio may caution against further ventures here for many investors. Resources stocks seem to be incredibly oversold, but there also seems to be no way the transition to an electric, clean energy future is going to be achieved without this sector. Mining stocks will come back. It is just a question of patience. This is a tough argument to make when NVIDIA NASDAQ:NVDA stock is up 239% over 12 months, however.

CMC Markets

FTSE 350 stock picker James Coffey adds my former employer CMC Markets to this list in December. CMC Markets is a leading provider of spread betting and CFD trading accounts for traders in both the UK and other important trading markets. James reckons it is quite likely that a further rally in stocks in 2024 will translate into an increase in trading volumes for CMC. “CMC shares could also go a long way on a re-rating of the valuation alone.” James says in his article. The company also sports a strong balance sheet and importantly geographical diversification.

General Dynamics

Raine’s US pick in December was General Dynamics, the US defence giant. With the increased geopolitical risk engendered by the Russian invasion of Ukraine two years ago, Raine agrees with me that, sadly, spending on arms is on the up. There was a similar rationale behind my own pick of Raytheon Technologies. Raine points out a number of positive factors behind General Dynamics going into 2024, including its sequential increase in revenue and a record order backlog of $95.6bn. Revenue was also up 15% YTD.

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So how are our picks getting on?

James Coffey’s FTSE 350 portfolio

*Prices as of close of play on 29 December 2023

Raine Lahtinen’s US stocks portfolio

*Prices as of close of play on 29 December 2023

Tactical trading portfolio

These are shorter term equity and commodity trades which we can see playing out within one to three months. We will sometimes keep these on longer if the trade is still quite range bound but we are anticipating further upside. These trades have the tightest risk parameters.

*Prices as of close of play on 29 December 2023

Longer term buy and hold portfolio

These are positions where we see a longer term growth scenario, usually in the small to mid cap space, but sometimes larger companies. We will typically be keeping these stocks on the list for at least six months and often longer. Consequently our risk tolerance is higher for these positions than for the trading list.

*Prices as of close of play on 29 December 2023

Venture portfolio

These are companies which we see as having long term and considerable growth prospects. Due to their size and the nature of the business they are in, we feel that our normal risk management constraints should not be applied to these stocks.

*Prices as of close of play on 29 December 2023