Shares to buy, hold or sell

The Old Mutual North American Equity fund has outpaced its benchmark to return 39.3% over the past year, and is ranked an enviable fifth in the 78-strong IMA North America sector. Co-manager Ian Heslop tells Holly Black which shares he is buying, holding and selling.

Buy - Boeing

Aircraft manufacturer Boeing has nearly doubled its share price over the past year, but Heslop still thinks it has some way to go.

"Earnings are up significantly, revenues are increasing and even though the share price is outperforming the sector, the valuation is still compelling when you take everything into account," he explains.

The Old Mutual North American Equity fund has a relatively high turnover, with companies typically staying in the portfolio only around six months, but Heslop says he is positive on Boeing and expects to hold the share for at least another six to 12 months.

"It has delivered a larger number of planes than expected, but there is a backlog that is very solid still and is driven by commercial purchases. And the 787 Dreamliner [which was grounded last year for almost four months after a battery fi re on a Japan Airlines 787 in Boston] is out of the door now too," he says.

"The share price is moving in a way that suggests we continue to buy; we hold the stock across all of our portfolios," Heslop adds.

He originally bought the share in October 2013. Had he bought it at the beginning of 2013, he would have seen the share price move from around $75 (£45) to $140 in that time.

Hold - Nu Skin Enterprises

"I struggle with saying I'm 'holding' a company, because it suggests that we don't have a view on a stock; in fact every share is in this portfolio for a reason and every share has a job to do,"comments Heslop.

There are currently some 180 holdings in the fund's portfolio and he says they are reviewed every day, based on their technical data and fundamentals, "regardless of the reason we bought the share".

I struggle with saying I'm 'holding' a company, because it suggests we don't have a view on a stock; every share is in this portfolio for a reason and every share has a job to do."

Nu Skin Enterprises has been held for more than a year, which is a relatively long period for this fund. The company came in for a bad rap in April 2012 when investors were concerned about its business model – its Avon-esque direct-to-consumer sales model made some worried it was a type of pyramid scheme.

"It's not," says Heslop. He believes the market simply got nervous and the company was tarred with the same brush as some less reputable businesses that were coming under fire at that time. The share price dropped from $60 to $40 as a consequence of those concerns.

"We liked it on valuation and on its technical data, and thought it was unfairly affected. It has performed very well compared with our expectations," says Heslop.

Indeed, he might well say that, given that the share price has subsequently bounced back to almost $140.

Sell - Gartner

Gartner is an IT consulting firm, which Heslop has liked since "at least the second quarter of 2013". The company has solid growth opportunities in a solid sector, and is sitting on a strong balance sheet.

"But lately the price movements have been getting ahead of the earnings that we see for the company," says Heslop. He adds that the company's November 2013 update made him less positive on the business, and that its valuation has started to look "less compelling," so he has started taking profits from the holding.

IT is a cyclical sector, explains Heslop, and it is vulnerable to cuts in spending. Gartner has not escaped this: governments are looking to tighten their spending programmes, and consulting is one area in which that is quite easy to do.

"We still think it is a solid company, but I am moving to a more neutral view," says Heslop. The company has outperformed its market by around 15% since he began purchasing it, and the share price is currently around $70, up from $49 a year ago.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.