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Season three of Fantasy Fund Manager has kicked off and it’s time to pick your winning mix of British stocks. While many will favour “gut feeling” approaches, there are several time-old strategies favoured by professionals.
The Telegraph’s share tipping game launched today and everyone starts with £100,000 to invest in between five and 20 stocks from the FTSE 350, the largest British companies.
There is £1,000 up for grabs each week for the player who grows their money the fastest, while the overall winner after two months will take home a grand prize of £5,000.
For those unsure as to where to start, you could adopt either a “value”, “growth” or “momentum” approach. These are trusted tactics that most professional investors model their funds on.
Momentum strategy
The “momentum strategy” is one of investing’s oldest tactics. This consists of betting on the winners in the hope that the fastest rising stocks will continue to jump higher, gaining from an upward movement.
There is no guarantee that yesterday’s winners will be tomorrow’s but unless the companies are dealt a big blow, many continue in an upward trend.
Those who pick this strategy can either play it as a low maintenance “buy and hold”, investing in the fastest growing stocks of the year so far or they can change up their portfolio more often by buying the previous day’s winners.
The biggest winners of the first three months of 2021 in the FTSE 350 have been:
Gamesys Group
Share price rise: 67.4pc
Tullow Oil
Share price rise: 58.5pc
Cineworld Group
Share price rise: 50.8pc
Royal Mail
Share price rise: 48.2pc
Just Group
Share price rise: 47.8pc
Value strategy
“Value” firms can be attractive for investors who believe their share price is too cheap compared with the underlying company’s worth. If the share price of a strong company drops unjustifiably, it can be a great opportunity to buy and make big winnings in the Fantasy Fund Manager game. But timing will be everything.
Many of these stocks saw their business models uprooted by the multiple lockdowns however, their prospects have been improving since the Government announced the easing road map.
Here are a few stocks to consider starting out with.
Rank Group
Rank Group owns gambling brands such as Grosvenor Casinos and Mecca Bingo which could be a beneficiaries of regulatory change, according to Peel Hunt, a stock broker.
Shares have fallen 49pc in the past 12 months and it has a price-to-earnings (p/e) ratio, which tells you how much you are paying for a company’s shares relative to their profits, of 20 based on last year’s earnings.
FirstGroup
FirstGroup is an international transport group that was hit hard by the pandemic but could be in for a strong recovery this year if it wins contracts off smaller operators for school transport services.
Mitchells & Butlers
This group, which owns hospitality brands such as All Bar One and O’Neills, has had a tough time during the pandemic, but that could change. David Henry, of investment group Quilter Cheviot, said: “The company is currently raising money from existing shareholders in order to fund their overheads during periods of closure, and acquire new sites which come to the market.”
Unite Group
Britain’s largest provider of student accommodation has been resilient during the pandemic and could bounce higher in this academic year if classes can resume.
Growth strategy
“Growth” stocks have been the clear winners of the pandemic, as technology stocks tend to be among the fastest growing in the market. These stocks have also been on top for much of the last ten years.
However, shares in technology companies have been hit hard at the beginning of this year and may not be your winning ticket in this season of Fantasy Fund Manager. Investors have run scared amid fears of a surge in inflation, which sent shares tumbling.
Shares in Scottish Mortgage, Britain’s largest investment trust, fell 22pc from their peak on February 16, as it was heavily invested in growth stocks such as electric car maker Tesla and retailer Amazon.
But if predictions of higher inflation fail to materialise, growth stocks could enjoy a sharp bounce back, sending you to the top of the leader board. One way to bet directly on these growth companies is to add either the Scottish Mortgage Trust or the Allianz Tech Trust to your portfolio in the game.
Here are some individual growth stocks that could bounce higher in the coming months according to experts.
Sage Group
Accounting software giant Sage has had a difficult few years adapting to new technology but it now has a new management team which could make all the difference, according to Phil Harris of EdenTree, a fund provider.
He said: “Its new cloud based products show significant strength and earnings growth is beginning to accelerate again which should result in higher dividends.”
Ocado
Online food orders have rocketed since lockdown and Ocado and its investors have been a huge beneficiary. Martin Maloney, of Killik & Co, an investment house, backed the online grocer as a winners for the year. Mr Maloney said the group has had a positive start to the year with revenue up 40pc and tipped the group to grow strongly in 2021 as it expands.
