As we step into 2020, I’ve been looking for fresh inspiration to make good investing decisions, especially since we really can’t rule out a recession next year. And who’s better than ace investor Warren Buffett to look to for some dependable advice?
While there are a number of investing lessons to learn from what he says, I think there are as many from the investments he makes. His US-based investments are across a range of sectors, with the top three being financials, information technology, and consumer staples.
Based on this, I selected top picks in each of these sectors from the FTSE 100 universe which can hold us in good stead over the long term. These are:
Financials – London Stock Exchange
I like a number of FTSE 100 financial services providers, but one that stands out is the London Stock Exchange (LSE: LSE), whose share price has shown impressive double-digit growth each year over the past five years. This year alone, its share price has risen by over 33%.
It’s just bought data and analytics provider Refinitiv in a $27bn deal, which is expected to enhance its offerings. This sounds promising and I’m looking forward to seeing how the two complementary businesses come together over time.
The only catch to LSE is that it’s quite expensive; with its share price near all-time highs, it has a price-to-earnings ratio (P/E) of over 50 times. And this is despite the fact that the share price has fallen slightly during this month. Even if it’s not an immediate investment, I’m definitely looking to buy LSE in 2020 as and when it looks more affordable.
Technology – The Sage Group
It might not be the most high-profile of technology companies, but it is still the UK’s biggest tech company by market capitalisation. I’m talking about the FTSE 100 accounting software provider The Sage Group (LSE: SGE), whose share price has shown a rise of over 46% since I first wrote about it last year.
This impressive performance is despite the fact that investors have been disappointed with some of its recent results as the group undertakes restructuring of its products and services. I think it’s a great defensive play in the present scenario, given the predictability of the software services business and its importance to the functioning of a business.
Still, the on-going shift in its business should give the investor opportunity to buy on share price dips in 2020. I’ll sure be looking out for them.
Consumer staples – Unilever
Much like Sage, Unilever is also a nice defensive to have in the investing portfolio at an ambiguous time. In fact, its wide geographical operations can hold the investor in good stead in case of weakness in a particular market. There’s little to dislike about it, especially since of all three mentioned here it also has the lowest P/E of 18 times.