Survival guide for Sids

By ANDREW OXLADE, COLUMNIST
Updated:

 

A SURVIVAL guide for the nation's favourite stocks warns investors to dump their British Airways and Bradford & Bingley shares while increasing their holdings in BT Group and BG, the former British Gas.

Millions of Britons own shares they snapped up cheaply during the privatisation era, or bagged for free when their mutual converted to stock market status. But too often investors fail to keep tabs on their stock's prospects. The Railtrack collapse highlights the dangers of holding shares in just one company.

'Over half the share-owning population hold only post-privatisation shares,' says Gavin Oldham, chief executive of The Share Centre, a stockbroker.

'The fear is that many people just sit on these shares or don't review their investments. This is dangerous as their performance and future prospects differ wildly as Railtrack shareholders have found to their cost.'

The Share Centre, one of the UK's larger independent brokers with 200,000 clients, has produced a report on how such shares have fared and whether investors should bail out or buy more.

The worst performer has been energy giant International Power, which has plummeted 59% since demerging from National Power. The Share Centre says investors should sell because electricity prices are on the slide - which will continue to knock IP's shares.

Mobiles operator mmO2 is another straggler, down 45% to 45p since spinning off from BT Group last year. But the Share Centre rates the stock a buy because it says if the management fail to put the firm back on track, it will be bought out by a rival, so pushing up the price anyway.

Life assurer Friends Provident is another prominent loser, down 45% to 134p since demutualising a year ago.

Better performers include Abbey National, where the shares have climbed four-fold since demutualising in 1989, and Lloyds TSB, which has grown more than five-fold since TSB listed in 1986. The Share Centre says investors should hang on to both. Their prospects are not sparkling - reflected by recent poor performance - but they should bounce back with a recovering stock market.

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It is less positive about some other widely-held shares. BA, it says, is highly vulnerable to recession - and to the whims of US passengers, terrorist attacks and hikes in the oil price. 'We have been advising a sell since the shares were 368p and as we believe the shares are heading south, there is still time to sell now,' says Damion Larkin, head of advisory services.

It is most bullish about sectors that offer some safety in turbulent stock markets. It has buy ratings on four water companies - AWG, Kelda, Severn Trent and United Utilities - and oil and gas groups BP, BG and Centrica, the gas billing arm of the former British Gas.

However, shareholders should not rely on views from one source. Enter the name of your stock in Get Quotes on This Is Money's News & Markets section. The results will include past stories on that stock plus any broker recommendations and newspaper tips.

Using this information in conjunction with our Share School and factfile on Cheap Shares: Finding Value should then help you reach a decision. If in doubt, seek a second opinion from another broker.

Click here for the full reports from the Share Centre.

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