Happy stocks that will bring investors joy

You can’t buy happiness, they say, but plenty of global businesses would disagree.

Holidays add to the sum of ­human happiness. So does being in good health. Toys and games can make little boys and girls very happy (and big ones too).

So can fashion, gadgets, movies, theme parks and social media, by helping friends and fam­ily stay in touch wherever they are in the world. A bit of retail therapy can also cheer people up.


Everybody wants to be happy, and investors can play on this potentially rewarding trend by buying the stocks of companies that spread a little joy.

The act of investing can itself bring happiness, as a new survey by the UK stockbroker The Share Centre reveals that 81 per cent of those who invest for their future are satisfied with their well-being, against just 62 per cent of those who do not.

We asked some share analysts to pick their top happy stocks, ones that should make investors’ lives more rewarding.

Johnson & Johnson

Tom Anderson, a regulated chartered investment adviser at Killik & Co in Dubai, says if health equals happiness, then the US com­pany Johnson & Johnson, the “largest and most diversified healthcare company in the world”, should please investors.

Johnson & Johnson’s share price has almost doubled over the past five years, and grew a steady 7 per cent over the past 12 months.

Mr Anderson adds: “Johnson & Johnson is a global healthcare leader and these results highlight the resilient and predict­able nature of its businesses and products.”

Expedia

Mr Anderson also picks out Expedia, the US-based parent company of several global online travel brands including popular booking websites Expedia.com, Hotels.com and Trivago.com. “The online travel market should continue to grow over and Expedia remains well-positioned to play this theme,” he says.

Expedia’s share price has quadrupled over the past five years, but growth has slowed lately and it rose 4 per cent over the past 12 months.

Mr Anderson says recent growth has been knocked by acqui­sitions and short-term headwinds. “We believe the long-term trend of a growing online travel market is clear and Expedia remains well positioned to play on this theme.”

He picks out TripAdvisor, the world’s most visited holiday website, as another travel stock that should go far.

Harley-Davidson

For some, happiness is revving up a Harley-Davidson and hitting the road. Mr Anderson says the Harley-Davidson Motor Company remains the world’s leading motorcycle brand. “Over time, the company is expected to grow internationally as well as increase sales among younger bikers in the US.”

Investors in Harley-Davidson haven’t enjoyed such an easy ride lately, with sales and revenues falling in recent months. The stock is up 10 per cent over five years but skidded 29 per cent over the past 12 months. It is still a big noise, especially in the US, where it accounts for half of all big bike sales.

Walt Disney Company

Disney has been entertaining the world for decades and has also sprinkled its magic on investors. Its share price has been a dream come true over the last five years, rising 130 per cent. But recent performances have left little to celebrate, down 10 per cent over the past year.

Mr Anderson says The Walt Disney Company is more than just movies, TV and theme parks. “It also produces content under ­Pixar, Marvel and Lucasfilms, and owns the ABC and ESPN Cable networks.”

He adds: “Disney continues to outperform across most of its businesses, thanks to its unrivalled content franchises and merchandise revenue.”

Merlin Entertainments

Everybody loves Lego, and Laith Khalaf, senior analyst at the UK financial advisers Hargreaves Lansdown, tips theme park specialist Merlin Entertainments, which owns Legoland Discovery Centres around the world. The London-listed company also manages the global aquarium brand Sea Life, Madame Tussauds and a string of UK theme parks, including Alton Towers, Chessington and Thorpe Park.

Mr Khalaf says Merlin is second only to Disney as an operator of themed visitor attractions. “2015 was a difficult year following a terrible roller-coaster accident at Alton Towers, but its longer-term prospects look good,” he says.

Merlin is a relatively new corporation and it has cast a spell over two years, its share price rising 28 per cent in that time, followed by a rather less dazzling 2 per cent over 12 months.

Apple

Chris Beauchamp, senior market analyst at the global online trader IG, which recently opened offices in Dubai, says the technology giant Apple still has the power to make investors happy, even if the days of stellar growth are over. “Its share price has fallen to around $110, down from $130 last July, but that actually makes it better value as it no longer looks overpriced. Its market dominance looks set to remain unchallenged for years.”

Over five years, Apple’s share price has more than doubled, but recent performance has been less crunchy, with the share price down 14 per cent over the past year.

Facebook

Mr Beauchamp also picks out the global social networking site Facebook, which has delivered stellar growth, rising nearly 200 per cent since its initial public offering in May 2012.

Mr Beauchamp says: “The downside is that it is expensive and has to keep growing rapidly to live up to massive expectations. Another possibility is that a rival could challenge its market share but that hasn’t happened yet.”

Facebook’s momentum has continued, with the share price up 33 per cent over the past 12 months.

Kering

Shopping can spread a little happiness and Garry White, chief investment commentator at stockbrokers Charles Stanley, names the Paris-listed luxury goods group Kering. Its brands include Alexander McQueen, Gucci, Stella McCartney, Saint Laurent and Balenciaga. “Lux­ury goods companies have been hit by a crackdown on bribes and expensive gift-buying by Chinese authorities, but there are signs of an improvement. Led by the French icon Francois-Henri Pinault [who is married to Salma Hayek], Kering’s sales rose 15 per cent in 2015.”

Kering’s share price is down 16 per cent over the past year, but over five years it has still served up a more stylish 36 per cent growth.

Boohoo

Mark Dunne, the head of research at the online investment platform AJ Bell, names UK-listed Boohoo.com as a stylish stock pick. “This is a pure-play online fashion retailer that is taking market share from traditional clothing retailers as spending shifts to the internet. Its key growth markets include France, Germany, Ireland, Australia and the US.”

This fast-growing stock is up 66 per cent over the past year.

Amazon

Mr Dunne also rates Amazon, the world’s largest e-commerce retailer. “Everybody knows that Amazon allows consumers to buy a vast array of goods from the comfort of their sofa, but fewer know about Amazon Web Services, its collection of cloud computing services. This adds depth to the investment case, as it is expected to grow revenue at around 50 per cent a year.”

The Amazon founder Jeff Bezos is known for prioritising boosting market share over short-term profits, but that hasn’t hurt the share price, which is up 56 per cent over the past year and has more than doubled over five years.

Character Group

Happy children mean happy parents, and Mr Dunne picks out the UK-based toy maker Character Group, which designs and distributes toys and games to more than 30 countries worldwide.

Brands include Disney’s Frozen, Minecraft, Peppa Pig, Postman Pat, Scooby Doo and its new range of Teletubbies toys.

Early sales of the Teletubbies range have been encouraging, and Mr Dunne says there is plenty of scope for further growth.

“Teletubbies was launched in 1997 and has been watched by over 1 billion children worldwide. An updated version hit screens at the end of last year.”

Character will introduce Teletubbies toys in Italy, France and Australia this year and should launch in the US next year. “The company is resilient to economic downturns because spending on kids is the last thing parents cut down on.”

Investors in Character Group have had plenty of fun lately, with the share price rising 38 per cent over the past year and 180 per cent over five years.

As the French author Antoine de Saint-Exupery, who wrote the much-loved children’s book The Little Prince, said: “True happiness comes from the joy of deeds well done, the zest of creating things new”.

All these companies pass that test and could spread joy to the people who invest in them as well. But remember past investment success is no guarantee of future happiness.

Can ethical investing truly make you happy?

For a minority of investors, making money isn’t enough to keep them happy on its own. They also want their wealth to be invested in a socially responsible way in line with their personal ethics.

Ethical investing, or to use the official term, socially responsible investment (SRI), goes all the way back to 1984, when insurer Friends Provident launched its Stewardship Growth Fund.

The fund adopted the revolutionary strategy of excluding companies that did not meet its ethical standards, such as those involved in tobacco, gambling, pornography and the military, while also trying to invest in enterprises that made a positive contribution to society.

At the time, cynical traders in the City of London dubbed it the “Brazil” fund, because they thought anybody who invested in it must be nuts.

Keren Bobker, senior consultant at the international financial services company Holborn Assets in Dubai and The National’s On Your Side columnist, says: “The fund survived and still exists today, managed by Foreign & Colonial [F&C], and there are now more than 100 socially responsible funds managing more than $10 billion in total.”

Despite this growth, few private investors even know that ethical investment is an option, and even fewer advisers cater for those who do.

Ms Bobker says that when she tells her clients about it, many want to know more. “I always ask if this is something that they are interested in and a significant percentage would like at least part of their money invested in this way.”

She says there is some crossover with Sharia-compliant mutual funds, which also shun alcohol, gambling, tobacco, pornography and other sectors. “The two have much in common and some investors even treat them as alternatives,” she says.

F&C now has soc­ially responsible funds including F&C Ethical Bond, F&C Global Climate Opportunities and F&C Sharia Sustainable Opportunities.

“The F&C fund range is ­worthy of consideration and can be found on some platforms, although ethical choice for offshore investors is limited,” says Ms Bobker.

One downside is that SRI funds may be riskier and more volatile because managers can only choose from a limited pool of stocks, often screening out oil stocks, big banks, the defence sector, and companies that cause environmental damage. This means many are limited to smaller and medium-sized stocks.

So how much of a sacrifice do you have to make for your principles? There is no doubt that ethical fund performance has been patchy, although it is not as bad as some claim, and it has picked up lately.

Figures from Trustnet Offshore show that the average fund in the Equity Ethical sector grew 20 per cent over five years, but fell by a hefty 12 per cent over the past year, which was a troubled one for stock markets generally.

By comparison, North Ame­rica returned 40 per cent over five years, twice the amount, while falling just 6 per cent over the past year.

While this suggests greater volatility, ethical fund performance has broadly matched Europe over five years and easily beats emerging markets, which are down 21 per cent over five years.

Patrick Connolly, a certified financial planner at advisers Chase de Vere, says one reason ethical funds have done rela­tively well lately is that many shun oil, gas and mining companies, which have performed badly over the past year or so. “The danger is that ethical funds will be locked out when these sectors start to recover, hitting performance.”

Mr Connolly says ethical investing has yet to really take off. “The overriding objective for most investors is to maximise returns and manage risk, both of which are more difficult to achieve if investing ethically.”

Investors also have to check that any fund matches their personal beliefs. “Each fund has a different approach, so a company that one fund screens out may be considered ethical by another. You have to make some compromises, either to your investment returns or ethical beliefs,” adds Mr Connolly.

For those who are keen to invest ethically he tips UK-listed mutual funds Aberdeen Ethical World Equity, Standard Life UK Ethical, Kames Ethical Equity, Kames Ethical Corporate Bond and Rathbone Ethical Bond funds.

business@thenational.ae

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