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Shares to watch in 2013 - by the team that made 48 per cent in 2012

The team at i was in winning form in 2012. James Moore is looking for a repeat this year

Wednesday 02 January 2013 11:00 GMT
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Forget about the Lottery: If you want to get rich, follow the i team's share tips. Last year's ten to follow didn't just beat the market – they left it for dead. Had you invested £1,000 in each of the ten, today you would be sitting on £14,748, a return of 47.5 per cent. By contrast, the FTSE 100 index ended the year at 5,897.81, an increase of 5.8 per cent on the 2011 close of 5,572.28, turning your £10,000 into £10,580 (excluding dividends in both cases).

The best of the 2012 tips was the oil minnow Providence Resources, which more than doubled in value after striking black gold off Ireland, but Lloyds Banking Group, Moneysupermarket, Intermediate Capital and William Hill all posted share price rises of more than 30 per cent.

So here are this year's ten. We start with Vodafone (154.45p), which was under a cloud for much of the past year. Life's not easy for telecoms companies, but Vodafone is doing better than most, and now offers a prospective yield of almost 7 per cent while trading on a modest multiple of 10 times forecast earnings for the year ending 31 March. The shares are cheap.

GlaxoSmithKline (1,335p) is a classically defensive play. But, like Vodafone, the shares have been treading water. They trade on just 11 times forecast earnings with an attractive dividend. Investors have started to cotton on to the fact that this company is undervalued, but there should be more to come.

ICAP (307p) endured a rough year. Michael Spencer, the chief executive, complained about the toughest trading conditions in his 36-year career. He has battened down the hatches and slashed costs. ICAP now trades on less than nine times prospective earnings, and yields 7 per cent. The shares have been creeping up recently because the market has realised the shares have been oversold.

Close Brothers (863p) is a multi-faceted bank that survived the financial crisis without a bailout. The shares rose 44 per cent last year, but they were criminally undervalued and at 10.7 times forecast earnings for the year ending July 2013, plus a rock-solid dividend, they still aren't overpriced.

I've long been a sceptic when it comes to Betfair (686.5p) because it has been high on hype but low on delivery. However, I'm willing to take a punt on Breon Corcoran getting the company to live up to expectations. The former head of the wildly successful Paddy Power online business could also bring a bit of PR savvy to a business that hasn't always been easy to like.

Results for the year ending 30 April might not look too clever, not least with the company pulling out of Germany and Greece after rows with regulators. But even at 20 times prospective earnings, there is scope for a bounce in the shares towards the end of the year.

Anglo American (1,894p) was among the worst-performing Footsie stocks of the past year so 2013 could see a recovery. There has been some encouraging data out of China recently, and at 12 times forecast earnings the company looks cheap.

Aggreko (1,740p) is the world's biggest temporary power-supply company, and has had a wobbly few weeks. The lack of an Olympic boost and US troops pulling out of Afghanistan will dent revenues by £100m next year, and the shares are 29 per cent off their year high. But even at 17.5 times forecast earnings, now is the time to buy a business on the dips that derives the lion's share of its revenues from sprightly economies outside sluggish European markets.

St James's Place Wealth Management (421.5p), with its ever-expanding network of financial advisers, ought to do well out of the decision by the Financial Services Authority to shake up the way financial products are sold.

For this year's risky plays, first up is Amerisur Resources (46.75p). Its shares are expected to soar this year as it prepares to increase daily production from its south-east Columbian oil field from 5,000 barrels a day to 20,000 by 2015. Finally, we give you Thomas Cook (48p). The tour operator still has too much debt. But Harriet Green, its chief executive, knows her onions and it is worth betting that she can spark a revival in the company and the shares.

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